Overcapacity in the IT market has created a buyers' market and
chief information officers must act now to renegotiate contracts
under more favourable terms "from extremely anxious vendors".
That was the message of Gartner's chief executive officer Michael
Fleisher during his keynote speech at the company's Symposium/ITxpo
in Florida.
"You have the incredible good fortune to be in what is, quite
simply, the best market ever for technology buyers," Fleisher said.
"Overcapacity in the industry is giving you the perfect opportunity
to lock in great new terms."
Users should act now because present pricing levels "will
definitely disappear in the next 12 to 24 months", he said.
"Your success over the next couple of years will be determined by
how well you take advantage of this opportunity over the next 12
months," Fleisher said.
This is bad news for IT vendors, who continue to face falling
prices, sagging demand, industry consolidation and excess capacity,
he noted.
There is no prospect for a broad-based recovery in the IT industry
next year, Fleisher said, reiterating his prediction made at this
event last year that half of well-known IT vendors will disappear,
either through bankruptcy or acquisition, by 2004.
IT spending is expected to increase only 3.4% in 2002 over 2001 and
growth in IT spending is expected to improve to 7% in 2003 over
2002, according to Gartner's Dataquest unit.
But even this lags behind the 25% annual growth rates seen during
the 1990s. "The technology industry must change and accept growth
rates in the range of 10% a year," he said. "Reality and not
wishful thinking must drive the behaviour of vendors who hope to
prosper in this environment."
In order to sell their wares, vendors must prove with concrete
measurements to chief information officers that their products can
generate business value.
The chief information officers need to understand how technology
can drive revenues is also increasing, because more and more chief
information officers are reporting directly to the chief executive
officers of their companies. Almost half of chief information
officers surveyed recently by Gartner now report to chief executive
officers, and more than 80% expect to do so by 2005, Fleisher said.