After years of relatively modest but comfortable ICT expenditure increases Australian businesses are about to be hit by a severe ICT budget slowdown. Longhaus’ 2009 ICT Spending and Priorities Study forecasts only 1% ICT budget growth in 2009-2010; down from 8% last year. When combined with a slump in inflation and domestic economic growth this forecast is likely to be further discounted leaving little change to the size of the local ICT market currently calculated by Longhaus as just under $170 billion per annum. Within the typical ICT budget, the proportion of funds going toward new investments will also decrease to 14%, down from 18% last year, with R D and new purchases the big losers. On this basis Australian ICT decision makers will need to come to grips with a starker financial reality than has been faced for sometime. However, the coming year will present a notable spending priority change with a move to increasing application renewal spending arising from a shift from hardware purchase to business application upgrades. The beneficiaries of this increased upgrading activity directly translate to higher spending on “applications-oriented” service providers, applications development platform vendors, Independent Software Vendors (ISVs), and systems integrators.