Gartner says that IT spending experienced its worst year ever in 2009. The Stamford Connecticut research firm says the enterprise space saw a spending decline of 6.9 percent. ChannelInsider reports that the industry won’t reach 2008′s spending levels again until 2012 according to Gartner. In the mean time there will be some growth in 2010. Gartner projects a 3.3 percent increase over 2009 levels to $3.3 trillion.
“2010 is about balancing the focus on cost, risk, and growth,” says Peter Sondergaard, senior vice president at Gartner and global head of research, in a prepared statement. “For more than 50 percent of CIOs the IT budget will be 0 percent or less in growth terms. It will only slowly improve in 2011.” On the other hand Forrester has a rosier picture. In their report released 10-08-09 “US and Global IT Outlook: Q3 2009“, Forrester analyst Andrew Bartels, says the global IT market will see an upturn, starting Q3 2009 in an article on Campus Technology.
According to Gartner things have been toughest on the hardware side of the computer market. Gartner says that worldwide computer hardware spending will total just $317 billion this year, a 16.5 percent decline, and in 2010 hardware spending will remain flat. Forrester says computer equipment sales will increase by 8.3 percent in 2010. Worldwide telecom spending is on pace to decline 4 percent this year and is forecast to grow by 3.2 percent in 2010 according to Gartner. Forrester claims communications equipment sales will show a bump at 3.6 percent
Additionally, Gartner forecasts IT services spending to total $781 billion in 2009 and to grow 4.5 percent in 2010. In their report Forrester predicts IT consulting services will increase by 11.7 percent in 2010 Software spending will decline 2.1 percent in 2009, but is expected to grow by 4.8 percent in 2010. Forrester says software purchases will be up by 9.3 percent in 2010.
Three big trends will shape the IT spending and operational infrastructure in 2010, according to Gartner—a shift in IT budgets to more opex from capex, the ramifications of an older infrastructure made up of older IT hardware, and the need for IT to create business cases for spending.
Gartner says the shift from capital expenditure to operational expenditure in IT budgets will be accelerated by emerging cloud services and will make IT costs more scalable and elastic. The second trend comes from delays in computer hardware upgrades. As business has delayed buying servers, PCs and printers, and is expected to continue to keep wallets closed in 2010, they need to look at the impact of increased equipment failure rates. “Approximately 1 million servers have had their replacement delayed by a year. That is 3 percent of the global installed base. In 2010 it will be at least 2 million,” Gartner says.
“If replacement cycles do not change, almost 10 percent of the server installed base will be beyond scheduled replacement by 2011,” Sondergaard says. “That will impact enterprise risk. CFOs need to understand this dynamic, and it’s the responsibility of the CIO to convey this in a way the CFO understands.”
Third, Gartner says that IT needs to build compelling business cases, “2010 marks the year in which IT needs to demonstrate true line of sight to business objectives for every investment decision. IT leaders can no longer look at IT as a percentage of revenue. CIOs must benchmark IT according to business impact.”
From where I stand, the Gartner predictions seem more rational than Forrester’s. Forrester seems to basing their optimism on two fleeting factors, Obama-money and Microsoft. The only real beneficiaries of Obama-money has been Wall Street, not the rest of America, so stimulus spending is irrelevant to most American business. Forrester seems to believe that Windows 7 will save IT spending, another large leap of faith that businesses are going to jump on the bandwagon, but none of my clients seem ready to leap yet.