Finally, Some Guarded Optimism on IT Spending

Ann All

After a year and a half of dismal economic news, the need for a little optimism is palpable. I wonder if that need is inspiring predictions like this one from Forbes: "2010 could be a very good year for tech, as pent-up demand across all businesses could in turn lead to fairly substantive purchasing, our industry observers believe."


The article cites HP CEO Mark Hurd's prediction that sales at his company could rise by 3 percent in 2010, and several financial analysts who think 2010 will be the year a significant number of companies finally decide to upgrade their badly outdated technology. A similar take is seen in this Wall Street Journal article that sees a turnaround in the slumping semiconductor market. That article quotes Lazard Capital analyst Daniel Amir:

We should see a bounce in enterprise spending in 2010, as corporations cautiously invest to upgrade aging IT equipment.

Those views seem supported by a recent Robert Half Management Resources survey in which the largest proportion of CFO respondents, 40 percent, said they'd invest in new IT systems or upgrades of existing ones when the economy recovers. (Lest we get too excited, the next biggest proportion, 19 percent, played it cautiously and said they'd make no new investments.)


The Forbes piece also mentions a Microsoft-sponsored white paper in which IDC predicts global IT spending will rise 21 percent over the next four years. Steve Ballmer cited the IDC spending data in a recent speech given to a UK business group.


Those numbers point to restrained growth, which is what Ballmer seems to expect. In an e-mail titled "The New Efficiency", he says IT organizations, and people in general, will spend more cautiously for the foreseeable future. Of course, Ballmer also hopes The New Efficiency will help move copies of Windows 7 and other products. But his larger point is that IT organizations will spend more carefully -- and maybe with specific business goals in mind -- as they try to help their parent companies recover from this crummy economy.


I made a similar point in a post last week, connecting the growing popularity of such game-changing technologies as virtualization, software-as-a-service and open source software with companies' need to streamline some of the system complexity that resulted from years of indiscriminate spending. Ballmer and I aren't the only ones who think this recession might result in some big changes for IT. Earlier this summer John Longwell, research director at Computer Economics, told me:

Recessions can force restructuring that sticks. Will IT organizations come out of this recession leaner? Outsourcing, SaaS, cloud computing are all strategies that in some way push operational functions from IT shops to outside service providers. You wonder whether the recession will accelerate some of these trends and whether some of the layoffs we're seeing will become permanent. We don't have hard evidence of that yet, but it's a possibility.

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Add Comment      Leave a comment on this blog post
Oct 13, 2009 4:41 PM MSFT_AlexT MSFT_AlexT  says:

Hi Ann,

Great article, thanks for sharing this. I am also one to think that there will be an increase in IT spending in the next few years but there will definitely be a conservative attitude towards using budgets.

I am really hopeful for Windows 7 as I believe it will reduce companies cost in the long term all while providing great new features and improving workers' productivity.

We will see how things go!



Microsoft Windows Client Team


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