News

Economic recovery is what you make it, says IDC

Economic recovery in the IT sector is in the eye of the beholder and, depending on what you're looking for, it may already be here, was the message from the 13th annual IDC European IT Forum in Paris.

Booms and busts are a recurring feature of the IT industry, and suppliers and buyers have weathered the cycle many times before, said IDC founder and chairman Patrick McGovern. He predicted another boom to come between 2013 and 2015, which he called the bio-IT cycle, and this will be driven by the euphoria of developing technology to prolong life.

He offered one snippet of investment advice for this boom: "Sell by the end of 2014."

IDC chief research officer John Gantz said worldwide IT spending growth slumped from 10.8% in 1999 to -4.1% last year. "This year, if we are lucky, it will climb up to 1%," he added.

Even if Gantz is right, that will not be enough to convince everyone the recovery is here, said Lester Thurow, professor of management and economics at Massachusetts Institute of Technology's Sloan School of Management.

Thurow offered two definitions of recovery, that of an economist, and that of a businessman.

"An economist means a sustained rate of growth: 0.1% is OK as long as it is positive. I don't think that a businessman sees any difference between +0.1 and -0.1. What a businessman means by a recovery is that you can make money through growth rather than downsizing," he said.

For economists, the existing economic environment is hardly a recession, while for businesspeople it's the worst they have seen since the Depression.

"The US has lost three million jobs since George W Bush took office, it's losing 100,000 jobs a month," he said, adding that it has been even worse for Europe.

Referring to his 1992 book, Head to Head: The Coming Economic Battle Among Japan, Europe, and America, he said Europe had had all the advantages, including the best-educated workforce.

"The question is, where did I go wrong? In 2002 Europe was the slowest-growing area of the world."

Since then, an inability to forecast and manage future growth has hampered Europe's economic progress, Thurow, said, and he had few kind words for the politicians and administrators at the head of the European Union, saying that the Swedes were probably right to reject the Euro in their recent referendum.

"Who would want to join a club that was managed so badly?" he asked

Paul Strassmann of consulting company Strassmann, said that what we are seeing is not a technology recession but one induced by chief financial officers. His message was that if you want to end your recession and spend some money, chief information officers have to act like chief financial officers, and that includes demonstrating the cost savings or return that new investments will provide.

Peter Sayer writes for IDG News Service


Email Alerts

Register now to receive ComputerWeekly.com IT-related news, guides and more, delivered to your inbox.
By submitting you agree to receive email from TechTarget and its partners. If you reside outside of the United States, you consent to having your personal data transferred to and processed in the United States. Privacy
 

COMMENTS powered by Disqus  //  Commenting policy