Cebit 2008 overshadowed by IT spending slowdown

The prospects of a slow-down in IT spending is expected to overshadow many of the attendees at Cebit 2008 next week.

The prospects of a slow-down in IT spending is expected to overshadow many of the attendees at Cebit 2008 next week.

The IT industry's largest annual exhibition will reflect concerns over a global recession that could put pressure on suppliers to offer better deals.

According to finance analyst firm CLSA, a steady growth in IT spending experienced for four straight years will flatten out during 2008.

Forrester Analyst Andrew Parker said that IT managers had entered a period of greater economic uncertainty. "That suggests that in the first half of the year, at least, that we will see some slowing down of sales cycles in enterprise markets for hardware or software and some delayed or deferred purchasing decisions."

"SMEs and mid market companies are telling us that they want to buy equipment now but cannot always get the upfront investment costs signed off no matter how good the return on investment figures are that they present to the board," said Ross White, director of marketing at networking firm Avaya.

IT directors will be forced to decide what IT projects are essential and may chose to fund projects that offer only quick payback periods of six month or less over projects that payback more than a year, said Angel Dobardziev, an Ovum analyst.

This could mean that IT projects involved with increasing datacentre capacity are more likely to get the go ahead.

"The majority of IT enterprise investment is in the datacentre and regardless of the economic situation, companies that run out of capacity will need to expand their datacentres in order to continue their operations," said Wendy Mars, director of systems engineers, Cisco UK

According to analyst firm Gartner, IT organisations should not wait for an official declaration that a recession has begun before undertaking IT cost-cutting efforts

Last October Gartner published research recommending that IT managers should prepare two IT budgets for 2008, the first reflecting guidance already provided by senior decision-makers and a second "backup" budget assuming the need to cut costs in response to the arrival of a business slowdown, said Ken McGee, vice-president and Gartner Fellow.

"Since that time the factors we based the research on have worsened to a degree that convinces us it is now time for clients to prepare for cutting IT costs."

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