Market outlook Rationalisation is the future, say suppliers

System rationalisation is the driving force behind IT spending in the current climate, according to the Ovum Holway survey of...

System rationalisation is the driving force behind IT spending in the current climate, according to the Ovum Holway survey of large suppliers.

The report predicts a gloomy outlook for the IT market as a result of continuing reduced spending by users.

In this climate the report says IT chiefs will continue getting more for less out of IT systems by rationalising hardware and software portfolios as well as simplifying relations with suppliers.

Anthony Miller, principal analyst and research manager at Ovum Holway, said rationalisation can be identified as occurring in a reduction of the number of systems and applications used through to a simplification in dealing with suppliers.

According to the survey, which questioned about 100 of the largest IT suppliers active in the UK, 2002 was the worst year on record for IT and the market shrank by 4% in real terms (excluding inflation) with continued contraction predicted until 2004 and only single-digit growth beyond that.

Miller said, "Rationalisation is occurring at all levels. Many companies are moving from a wide range of platforms and applications to common systems.

"There is also a noticeable move to a centralised IT structure with a single headquarters datacentre from a distributed model with departmentalised IT and managers. This gives the chief information officer more ability to co-ordinate and control costs.

"IT chiefs are also rationalising their suppliers from in some cases hundreds down to a few major ones. This is happening because it is more efficient from an administrative point of view as well as bringing visibility and better prices from economies of scale," he said.

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