Thought for the day:Sailing through the economic straits

As enterprise budgets shrink, Simon Moores looks at the shift in IT spending from businesses to the public sector.

As enterprise budgets shrink, Simon Moores looks at the shift in IT spending from businesses to the public sector.

Fancy a solid gold Rolex watch? A friend on London's Bond Street tells me that the prices on "pre-owned" models are falling sharply as the supply increases. In other words, one of the more accurate but less official economic barometers suggests that hard times are with us again.

Last week's financial results showed that things weren't going swimmingly with Sun Microsystems or IBM, even though matters could have been a lot worse. Only Microsoft was left grinning and took the opportunity to announce its first dividend, as net income for the company rose on a comfortable increase in turnover, the desktop, as usual, accounting for the lion's share of its profitability.

Interestingly enough, both IBM and Sun are, of course, Penguin fans and Linux is still some way from becoming a truly profitable interest for either company. IBM's Linux-on-mainframe MIPS shipments were up 45%. (MIPS, by the way, stands for "Meaningless Indicator of Processor Speed".)

Both Sun and IBM have rather different views on where Linux should "play" in the enterprise, IBM is very much in favour of offering a Penguin in every box, while Sun prefers to keep its own Penguins safely tucked away on the edge of the network where they can be admired at a distance.

Meanwhile, investment bank Merrill Lynch, in its quarterly poll of 100 US and European chief information officers, is predicting that IT budgets will remain in the doldrums, edging up 1% in 2003, against 3% in the previous survey. The only ray of sunlight in Merrill's research is the suggestion that IT spending on hardware, rather than software, may be more likely.

So if big companies aren't planning to spend money this quarter, we have to assume that the smaller businesses - the "nation of shopkeepers" as Napoleon put it - will be even more cautious with their spending. Perhaps this is why I'm hearing from more and more IT companies that they are focusing increasingly on the public sector, which is defying the trend and spending money without restraint.

The Socitm IT Trends 2002/03 survey, based on responses from 200 heads of ICT in councils throughout England, Scotland and Wales, found that the total estimated costs of local authorities' e-government programmes up to 2005 will exceed £2bn.

At a central government level, the Health Service is throwing money at IT like confetti. One fine example is The Medicines Control Agency (MCA) which has outsourced its IT services in a 10-year, £50m-plus deal, just three months before it is due to be merged into a new public body whose IT requirements are as yet unknown.

So while hospitals will receive more expensive machines that go "bleep" to place next to elderly patients on trolleys in lieu of doctors, the prospects for the remainder of the IT sector aren't looking great this year.

People keep asking me where I think the opportunities in 2003 may be and my reply, cynically enough is, that there is probably more money to be made by "shopping" companies to the Business Software Alliance (BSA) for using "illegal" software and collecting the £10,000 reward, than selling it to them in the first place!

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Zentelligence Setting the world to rights with the collected thoughts and opinions of the futurist writer, broadcaster and Computer Weekly columnist Simon Moores.

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