Analysts Now Predict Decline in 2009 Tech Spending


Both Forrester and Gartner have revised their 2009 IT spending projections again, finally conceding that companies will actually lay out less money this year than in 2008 for technology initiatives. After sticking with a few optimistic rounds of projecting limited growth, both analysts shops are now predicting a spending decline more steep than the dot-com bust.


The only area Forrester projects as set for growth is outsourcing, according to this comprehensive Channel Insider piece, and of course that often can be translated into a spending shift, as opposed to an entirely new investment.


Not coincidentally -- since the economy is pretty much on everybody's mind these days -- a chat I had over lunch with Bart Perkins today touched on how tight the tech purse strings are drawn. Bart consults with enterprises on the front end about which projects they should invest in, in terms of business impact. He describes the vetting process as "if you have 10 IT projects and money to invest in three of them, which ones do you pick?" Of course, when the company doesn't have any money at all, that sort of obviates the process, and Bart reports the consulting business -- which is often viewed as discretionary spending -- is feeling the pressure.


Forrester concurs, with a projected drop in spending of about 2 percent on IT consulting for 2009.


(As a point of full disclaimer, Bart is an investor in IT Business Edge. He also is a contributor at Computerworld. I should probably buy him lunch more often.)


So what kinds of projects are getting the green light? Bart says only ones with very near-term -- like, this year -- payback.


This sounds like the one-talent man talking, I know, but it's often easier to save money than to make money -- particularly when everybody else is looking to save money as well. So focusing on new efficiencies is likely the best way for IT to prove its worth until 2010, which now appears to be the earliest projection for an overall economic recovery.


A few more interesting notes form the Forrester and Gartner projections:


  • Hardware looks to take the hardest knock, with Gartner predicting a 14.9 percent drop spanning all categories. The international credit crunch bears much of the blame there.
  • Gartner is projecting more than 20 percent growth in "cloud" spending -- whatever that means this week. Software is the only key area that's not projected to lose money by Gartner, but the growth there is hairline at best.
  • Hedging its bets, Forrester says the recession may (a 25 percent probabilty) run well into 2010.


So we have that going for us.

Add Comment      Leave a comment on this blog post
Apr 2, 2009 3:19 AM Miichael Harris Miichael Harris  says:

Bart's observations are consistent with my recent experience (as President of an IT Metrics and Process Improvement company) but I don't necessarily see the focus on short-term payback as a bad thing.  There have been too many major IT projects in the past which have relied on increasingly speculative cost savings or revenue streams in successive future years to meet payback goals.  We encourage many of our clients to take an agile approach - look for small paybacks after every short phase (dare I say, sprint) of the project.  This year we are seeing more of them recognize the sens of this by only biting off small chunks at a time. 


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