IT budgets will grow next year but are unlikely to return to the double-digit rates of the early years of the 21st century, according to Iain Stephen, director of enterprise servers and storage for Hewlett-Packard (HP) UK and Ireland.
His words were echoed by Microsoft CEO Steve Ballmer, who told Korean IT executives: "While we will see growth, we will not see recovery."
Iain Stephen said enterprises have reacted to the recession in one of three ways. "Forty percent have got very conservative with their budgeting because they are uncertain about future economic growth, 40% are still trying to optimise their IT estate, for example by virtualising their desktops, and 20% are doing dramatically innovative stuff," he said.
Firms managing just to keep the lights on risked being unprepared for growth or for competition from unexpected sources. This was good news for HP's financing arm, as it gave corporate treasurers another source of finance for already-strapped budgets to respond quickly to market changes, he said.
Stephen said most IT products were now commodity items or based on open source or open technologies. Competitive edge now came from how one put together such items and applied them to business problems, he said.
He foresaw a time when there would be just a few main suppliers to enterprises. These could end up being HP, IBM, Cisco, and Google, with Oracle the wild card, he said. They would cater to firms of all sizes, and large enterprises would pick and choose from their product and service menus.
These firms would also supply those mid-market firms that still felt there was value in owning their own IT estate. But smaller firms were likely to turn increasingly to cloud-based services for applications and storage, which they would access via cheap commodity-class devices, he said.
However the physical side of the industry turned out, enterprises still needed better information, innovation capability, and elasticity if they were to win the battle against an unpredictable economic climate, and more competitive environment and fast-changing technology, said Stephen.
This made services a competitive differentiator, he said, referring to HP's acquisition of EDS. All large enterprises had legacy systems. They had to manage that legacy and see how they could move it to new technology that was cheaper to own and better at doing what they needed it to do. That required IT expertise to understand the start and end of such moves and expose the gaps to cross, he said.