Analysts Can't Agree on IT Spending Impact

Ann All

OK, we get it. IT spending is off. But although IT executives responding to recent surveys say they are cutting back, neither Gartner nor Forrester Research expect to see significant budget impacts until next year, reports InformationWeek.

 

Why? According to Gartner, many companies are in the midst of multi-year IT projects that are difficult to trim on short notice. And IT spending cuts tend to trail the broader economy by at least two quarters. In addition, a truly scary fourth quarter won't erase the spending gains seen earlier in 2008.

 

Gartner says it expects IT spending to grow an anemic 2.3 percent in 2009, down from its previous prediction of 5.8 percent. Forrester is more optimistic, calling for a 6.1 percent increase in 2009, down from its original forecast of 9.4 percent growth. The slowdown won't be as bad as the one following the dot-com bust, during which IT spending fell from mid-double digits to low single digits, says Gartner.

 

Disagreeing with Gartner and Forrester, investment banker UBS expects to see more immediate effects of the bad economy. According to CNET News, UBS believes IT spending levels in 2008 will be 5 percent to 15 percent lower than in 2007, and it anticipates a similar drop next year as well.

 

In particular, opines UBS, companies will put off purchases of servers and desktops. Like other observers, UBS predicts security spending won't suffer. In fact, UBS says it will grow 10 percent in 2008 and an additional 15 percent in 2009. Why? Companies that may lay off employees want to make sure they won't walk off with customer information or other sensitive data.


 

On a similarly gloomy note, Friedman, Billings, Ramsey & Co. is calling for "an extended period of weak IT spending," one that will outlast the current credit crisis.



Add Comment      Leave a comment on this blog post
Oct 22, 2008 12:20 PM Frits Bos Frits Bos  says:
Companies that drastically cut IT spending are suspect of not providing sufficient governance over what they are investing in. If the IT initiatives are properly tied to corporate goals and objectives to deliver enabling tools and processes, any spending cuts should be based on an assessment of those goals and objectives that no longer seem relevant in view of changing conditions. When a product or service is discontinued, all spending (which includes IT) should be discontinued in relation to that decision, but it should not affect other areas. After all, if you simply cripple operational areas that become more expensive as a result of canceling enabling functionality you are worse off than to complete the work and benefit from streamlining. I suspect that many companies just do not have the controls in place to make an intelligent cost-reduction decision and thus start cutting at random with IT being one of the more visible costs to be cut. Reply

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