IT spend up 3% in 2010, but don't uncork the champagne yet, says Gartner

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IT spend up 3% in 2010, but don't uncork the champagne yet, says Gartner

Ian Grant

Global spending on IT will grow 3.3% to $3.3 trillion next year, reversing the worst slump the industry has seen, says market analyst Gartner.

Gartner said worldwide spending on IT in 2009 dipped 5.2%, and enterprise IT spending fell 6.9%.

Gartner warned IT leaders not to be overly optimistic. "While the IT industry will return to growth in 2010, the market will not recover to 2008 revenue levels before 2012," said Peter Sondergaard, senior vice-president at Gartner and global head of research.

"2010 is about balancing the focus on cost, risk, and growth," he said. More than half of CIOs would see zero growth in their budgets before things improved in 2011, he said.

The hardware market has suffered most, with spending forecast to total $317bn in 2009, a 16.5% decline. Hardware spending would be flat in 2010, Gartner said.

Worldwide telecom spending would slip 4% in 2009 to nearly $1.9tn before rising 3.2% next year.

Worldwide IT services would hit $781bn in 2009, and grow 4.5% percent in 2010, it said. But spending on software would slide 2.1% before bouncing back to 4.8% growth in 2010.

Emerging regions would grow strongly but Silicon Valley was no longer in the driver's seat anymore, Sondergaard said. "By 2012, the accelerated IT spending and culturally different approach to IT in these economies will directly influence product features, service structures, and the overall IT industry," he said.

IT leaders had to consider three key issues in preparing their 2010 budgets, he said. These were the shift from capital expenditure to operational expenditure, ageing hardware, and the need to build compelling business cases for the IT budget.

Sondergaard said ideas like cloud services would speed up the shift to operational rather than capital spending because cloud made IT costs "scalable and elastic".

"CIOs need to model the economic impact of IT on the overall financial performance of an organisation. For public companies, they must show how IT improves earnings per share," he said.

Firms were likely to delay purchases of servers, PCs and printers into 2010, he said. This would result in more hardware failures and disruptions to service.

Sondergaard said some one million servers, 3% of the global installed base, should have been replaced last year. This would double in 2010.

"If replacement cycles do not change, almost 10% of the server installed base will be beyond scheduled replacement be 2011," Sondergaard said. "CFOs need to understand impact this has on enterprise risk, but it's up to CIOs to get it across."

Sondergaard said IT leaders could no longer factor IT as a percentage of revenue. "CIOs must benchmark IT according to business impact," he said.

As a result they would have to pay more attention to business intelligence applications, virtualisation, and social media, particularly as they addressed the over-60s, now the most crucial market segment, Sondergaard said.

Key issues for the future are:

• Context-aware computing, which would include location, presence, social attributes, and other environmental information to anticipate an end user's immediate needs.

• Operational technology, in which ambient devices, sensors, and software control or monitor physical assets and processes in real-time, increasing the need for a unified view of information covering business process and control systems.

• Pattern-based strategy, in which businesses seek early competitive advantage by finding, modelling, and adapting to exploit leading indicators that form patterns in the marketplace.

"A pattern-based strategy will allow an organisation not only to understand better what's happening now in terms of demand, but also to detect leading indicators of change. From this they can identify and quantify risks emerging from new patterns rather than continuing to focus on lagging indicators of performance," Sondergaard said.


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