As enterprise budgets shrink, Simon Moores looks at the shift in IT
spending from businesses to the public sector.
Fancy a solid gold Rolex watch? A friend on London's Bond Street
tells me that the prices on "pre-owned" models are falling sharply
as the supply increases. In other words, one of the more accurate
but less official economic barometers suggests that hard times are
with us again.
Last week's financial results showed that things weren't going
swimmingly with Sun Microsystems or IBM, even though matters could
have been a lot worse. Only Microsoft was left grinning and took
the opportunity to announce its first dividend, as net income for
the company rose on a comfortable increase in turnover, the
desktop, as usual, accounting for the lion's share of its
profitability.
Interestingly enough, both IBM and Sun are, of course, Penguin fans
and Linux is still some way from becoming a truly profitable
interest for either company. IBM's Linux-on-mainframe MIPS
shipments were up 45%. (MIPS, by the way, stands for "Meaningless
Indicator of Processor Speed".)
Both Sun and IBM have rather different views on where Linux should
"play" in the enterprise, IBM is very much in favour of offering a
Penguin in every box, while Sun prefers to keep its own Penguins
safely tucked away on the edge of the network where they can be
admired at a distance.
Meanwhile, investment bank Merrill Lynch, in its quarterly poll of
100 US and European chief information officers, is predicting that
IT budgets will remain in the doldrums, edging up 1% in 2003,
against 3% in the previous survey. The only ray of sunlight in
Merrill's research is the suggestion that IT spending on hardware,
rather than software, may be more likely.
So if big companies aren't planning to spend money this quarter, we
have to assume that the smaller businesses - the "nation of
shopkeepers" as Napoleon put it - will be even more cautious with
their spending. Perhaps this is why I'm hearing from more and more
IT companies that they are focusing increasingly on the public
sector, which is defying the trend and spending money without
restraint.
The Socitm IT Trends 2002/03 survey, based on responses from 200
heads of ICT in councils throughout England, Scotland and Wales,
found that the total estimated costs of local authorities'
e-government programmes up to 2005 will exceed £2bn.
At a central government level, the Health Service is throwing money
at IT like confetti. One fine example is The Medicines Control
Agency (MCA) which has outsourced its IT services in a 10-year,
£50m-plus deal, just three months before it is due to be merged
into a new public body whose IT requirements are as yet
unknown.
So while hospitals will receive more expensive machines that go
"bleep" to place next to elderly patients on trolleys in lieu of
doctors, the prospects for the remainder of the IT sector aren't
looking great this year.
People keep asking me where I think the opportunities in 2003 may
be and my reply, cynically enough is, that there is probably more
money to be made by "shopping" companies to the Business Software
Alliance (BSA) for using "illegal" software and collecting the
£10,000 reward, than selling it to them in the first place!
What's your view?
Where are the IT opportunities in
the current climate?
Tell us in an e-mail >>CW360.com reserves
the right to edit and publish answers on the Web site. Please state
if your answer is not for publication.ZentelligenceSetting the world to rights with the collected thoughts and
opinions of the futurist writer, broadcaster and Computer Weekly
columnist Simon Moores.