The IT industry is exiting its worst year ever, as worldwide IT spending is on
pace to decline 5.2 percent, according to Gartner, Inc. Worldwide enterprise IT
spending will struggle more with IT spending dropping 6.9 percent. The IT
industry will return to growth with 2010 IT spending forecast to total $3.3
trillion, a 3.3 percent increase from 2009.
Gartner provided the latest outlook for the IT industry during Gartner
Symposium/ITxpo, which is taking place here through October 22. While IT
spending will increase next year, Gartner cautioned IT leaders to be overly
optimistic.
"While the IT industry will return to growth in 2010, the market will not
recover to 2008 revenue levels before 2012," said Peter Sondergaard, senior vice
president at Gartner and global head of Research. "2010 is about balancing the
focus on cost, risk, and growth. For more than 50 percent of CIOs the IT budget
will be 0 percent or less in growth terms. It will only slowly improve in 2011."
The computing hardware market has struggled more than other segments with
worldwide hardware spending forecast to total $317 billion in 2009, a 16.5
percent decline. In 2010, spending on hardware spending will be flat. Worldwide
telecom spending is on pace to decline 4 percent in 2009 with revenue of nearly
$1.9 trillion. In 2010, telecom spending is forecast to grow 3.2 percent.
Worldwide IT services spending is expected to total $781 billion in 2009, and it
is forecast to grow 4.5 percent in 2010. Worldwide software spending is forecast
to decline 2.1 percent in 2009, and the segment is projected to grow 4.8 percent
in 2010.
On a regional basis, emerging regions will resume strong growth. "By 2012, the
accelerated IT spending and culturally different approach to IT in these
economies will directly influence product features, service structures, and the
overall IT industry. Silicon Valley will not be in the driver`s seat anymore,"
Mr. Sondergaard said.
From a budget perspective, there are three important items that IT leaders must
consider in 2010:
1 A Shift from Capital Expenditure to Operational Expenditure in the
IT Budget — Concepts such as cloud services will accelerate this
shift. IT costs become scaleable and elastic. CIOs need to model the
economic impact of IT on the overall financial performance of an
organization. For public companies, they must show how IT improves
earnings per share (EPS).
2 Impact of the Increased Age of IT Hardware — With delayed
purchases of servers, PCs and printers likely to continue into 2010,
organizations must start to assess the impact of increased equipment
failure rates, and if current financial write-off periods are still
appropriate. Approximately 1 million servers have had their
replacement delayed by a year. That is 3 percent of the global
installed base. In 2010, it will be at least 2 million. “If
replacement cycles do not change, almost 10 percent of the server
installed base will be beyond scheduled replacement be 2011,” Mr.
Sondergaard said. “That will impact enterprise risk. CFOs need to
understand this dynamic, and it’s the responsibility of the CIO to
convey this in a way the CFO understands.”
3 IT Must Learn to Build Compelling Business Cases — 2010 marks
the year in which IT needs to demonstrate true line of sight to
business objectives for every investment decision. IT leaders can no
longer look at IT as a percentage of revenue. CIOs must benchmark IT
according to business impact.
Mr. Sondergaard said three additional topics that were important in 2009 will
continue to dominate IT leaders` agendas in 2010. These three topics include
* Business Intelligence - Users will continue to expand their investments in
this area with the focus moving from "in here" to "out there"
* Virtualization - IT leaders should not just invest in the server and data
center environment, but in the entire infrastructure. In 2010, users will create
the cornerstone for the cloud infrastructure. They will enable the
infrastructure to move from owned to shared.
* Social Media - Organizations are starting to scale their efforts in this
space. The technologies are improving and organizations realize this is not only
about digital natives. It`s about all client segments including the most
significant: the population in the next 10 years, the above 60 year old
generations.
While those topics are key to IT agendas today, Mr. Sondergaard highlighted
three themes that will become important going forward. They include:
* Context-Aware Computing - This is the concept of leveraging information about
the end user to improve the quality of the interaction. Emerging
context-enriched services will use location, presence, social attributes, and
other environmental information to anticipate an end user`s immediate needs,
offering more sophisticated, situation-aware and usable functions.
* Operational Technology (OT) - OT is devices, sensors, and software used to
control or monitor physical assets and processes in real-time to maintain system
integrity. The rapid growth of OT is increasing the need for a unified view of
information covering business process and control systems. OT will become a
mainstream focus for all organizations.
* Pattern-Based Strategy - This is a new model about implementing a framework to
proactively seek, model, and adapt to leading indicators, often termed "weak"
signals, that form patterns in the marketplace, and to exploit them for
competitive advantage. A Pattern-Based Strategy will allow an organization to
not only better understand what`s happening now in terms of demand, but also to
detect leading indicators of change, and to indentify and quantify risks
emerging from new patterns rather than continuing to focus on lagging indicators
of performance.
About Gartner Symposium/ITxpo
Gartner Symposium/ITxpo is the industry's largest and most important annual
gathering of CIOs and senior IT executives. This event delivers independent and
objective content with the authority and weight of the world's leading IT
research and advisory organization, and provides access to the latest solutions
from key technology providers. Gartner's annual Symposium/ITxpo events are key
components of attendees' annual planning efforts. They rely on Gartner
Symposium/ITxpo to gain insight into how their organizations can use IT to
address business challenges and improve operational efficiency.
Upcoming dates and locations for Gartner Symposium/ITxpo include:
October 18-22, Orlando, Florida: www.gartner.com/us/symposium
November 2-5, Cannes, France: www.gartner.com/eu/symposium
November 11-13, Tokyo, Japan: www.gartner.com/jp/symposium
November 17-19, Sydney Australia: www.gartner.com/au/symposium
About Gartner
Gartner, Inc. (NYSE: IT) is the world's leading information technology research
and advisory company. Gartner delivers the technology-related insight necessary
for its clients to make the right decisions, every day. From CIOs and senior IT
leaders in corporations and government agencies, to business leaders in
high-tech and telecom enterprises and professional services firms, to technology
investors, Gartner is the indispensable partner to 60,000 clients in 10,000
distinct organizations. Through the resources of Gartner Research, Gartner
Executive Programs, Gartner Consulting and Gartner Events, Gartner works with
every client to research, analyze and interpret the business of IT within the
context of their individual role. Founded in 1979, Gartner is headquartered in
Stamford, Connecticut, U.S.A., and has 4,000 associates, including 1,200
research analysts and consultants in 80 countries. For more information, visit
www.gartner.com.
Gartner
Christy Pettey, + 1 408 468 8312
christy.pettey@gartner.com
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