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With daily questions about the economy and capital spending, one has to wonder what will happen to corporate information technology purchasing.
Well, according to a story in Saturday’s The New York Times, there will be some belt tightening – and perhaps deep I.T. cuts at some financial companies – but, citing IDC numbers, the Times said growth in technology spending may fall to 4% this year from 7% last year.
But that’s good news.
Granted, a drop in I.T. spending doesn’t sound like good news. But one has to keep things in perspective.
First, we’re still talking about growth.
Second, as the Times noted, tech spending fell 11% in the wake of the dot-com burst.
As for the belt-tightening, the Times said that there probably will be less spending on replacement PCs, delays in desktop software upgrades, and other cutbacks to basic operations.
Yet, according to the Times, CIOs who work within their budgets will have the money they need to spend in new areas.
And continuing to invest in strategic technology is a must.
Said the Times:
“Technology spending, if managed prudently, can … deliver new abilities and productivity without more dollars, executives say. With processing speeds and storage capacity doubling every 18 months or so, each generation of technology is faster, cheaper and smaller than its predecessor.
“So, according to Frank Modruson, chief information officer for Accenture, a real danger during an economic downturn is adopting a rigid austerity that saddles a company with technology that is behind the curve. Steady investment, he said, can save money fairly quickly because of the rapid pace of improvement in computing technology.”
The Time said that Accenture spends less on tech now than it did in 2001, even though it has twice as many workers.
“Information technology spending,” Gartner analyst Mark McDonald told the Times, “is not the rich target for cuts that it was in 2001.”
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