IDC Energy Insights' forecast for Worldwide Oil and Gas Industry IT spending has just been released. Compared with the previous forecast from IDC, overall IT spending in the oil and gas industry for software, hardware and services is expected to rise 4.7% from 2009 for a total global spend of $38.354 billion in 2010.

While the forecast for 2010 puts IT spend nearly on par with 2008 levels, the total forecast for 2010 is less robust than just six months ago. In August, we projected a global spend of $40.24 billion. The driver behind the decline is significantly lower spend in Central and Eastern Europe. In fact, North America increased ever so slightly, and most other regions of the world held their own.

The Worldwide Oil and Gas Industry IT Spending Guide segments IT spend into three areas:  line-of-business (upstream, downstream, and shared services); hardware, software, and IT services; and enterprise revenue; by the following regions of the world:  North America, Western Europe, Middle East and Africa, Latin America, Central and Eastern Europe.

Upstream applications are leading the growth in software spend. We believe that long-term IT spend is dependent on the need for applications that support enhanced oil recovery and finding new sources of hydrocarbons.

In January as part of our Top Ten Predictions, we noted several trends that are driving increased IT spending by oil and gas companies. These trends include internal restructuring for improved operational performance and efficiency drives, which we believe will drive another wave of rationalization and consolidation of legacy applications that is similar to the mergers and acquisitions in the late nineties. Also, IT initiatives will include capital projects and business intelligence applications for upstream assets that integrate technical, operational and financial information across the enterprise.

The long-term trajectory continues to grow after 2010, albeit at a slower pace than the previous forecast.

What are you seeing in the market?