IT spending projections fell in the last quarter of 2006, with CIOs predicting IT spending increases of 5.8% over the next 12 months. That's down from expectations in the previous quarter that spending would rise by 6.5% during the next year, according to the quarterly CIO US Tech Poll released last week.

According the survey, almost two-thirds of CIOs surveyed, 63.6%, have no plans to invest in Microsoft Office 2007 or its new Vista operating system in the next year. However, they do plan to invest in computer hardware, storage and security.

"This forecast decline in tech spending is in sync with other recent reports suggesting businesses will scale back capital spending in 2007," said Gary Beach, publisher at CIO Magazine. "However, with nearly two-thirds of CIO respondents indicating plans to focus on either growth or innovation in 2007, the question for CIOs remains how to implement these agendas with budgets that are largely flat."

CIOs said that their IT budgets had increased by an average of 5.8% over the last 12 months. In the last CIO Tech Poll released three months ago, CIOs said their budgets were up an average of 5% over the previous year.

When asked about spending across eight specific IT categories, the average number of CIOs who said they plan to boost spending over the next 12 months was 40.7%, up slightly from 39.7% in September. The percentage of those who plan to decrease spending remained essentially flat at 13.7%.

Computer hardware is the top spending priority among CIOs surveyed for the poll, with 55.8% of CIOs planning to increase spending in that area, compared to 46.9% in September. And only 11.7% plan to decrease spending in the year ahead, compared to 16.3% in September. Storage systems and security software were other areas where CIOs expect to spend more money in the coming year.

Of those eyeing potential upgrades to Microsoft Vista or Office 2007 in 2007, 20.7% said they need to evaluate pricing and user training costs before considering any such move, according to the survey. Of the 15.8% who said they will upgrade, 8.3% plan to upgrade to both, while 5.8% said they will only upgrade to Office 2007 and 1.7% said they will only upgrade to Vista.