New research released this week says 2007 technology investments in Europe are taking a turn inward, fuelled by initiatives aimed at better understanding company analytics and the ability to enhance manufacturing operations.

Analyst firm, AMR Research said the three largest IT markets in Europe – UK, Germany, and France – will continue to show growth in 2007. IT budgets are anticipated to grow 6.4% in the coming year, up slightly from last year’s growth rate of 5.6%. Small businesses (with less than $250 million or £128.5m in revenue) expect their IT budgets to grow by a robust 12.4%.

AMR said the overriding focus of this spending in all regions will be better utilisation and analysis of data, applying lean manufacturing practices, and a recognition of the growing importance of manufacturing operations.

It observed that, while IT budget growth registered an overall 6.4% in this year’s survey, the UK and continental small businesses with $10m to $250m in revenue seem to be driving that growth. UK firms expect their IT budgets to grow by 10.7% in 2007, outpacing growth in France (3.2%) and Germany (3.8%).

The analyst said companies appear to be focusing their performance management investments on dashboard and scorecarding products, with renewed vigour toward investment in manufacturing execution systems (MES) to enhance manufacturing operations.

It also said for many small and mid-size businesses (SMBs) the challenge lies in managing an increasingly network-centric manufacturing environment following years of outsourcing to contract manufacturers. The issue is how to manage such an environment while also increasing perfect order status and overall customer satisfaction. To that end, it added the desire to better understand customer behaviour is also apparent, evidenced by the priorities being placed on more effectively leveraging corporate data.