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What will happen to information technology budgets in the wake of the month's incredible financial news? That question is on many people's minds. To get a handle on where IT spending is headed, CIOZone editors collected predictions made within the past few weeks by the major IT market research companies. Granted, these estimates were all compiled before last week—and the future is, by nature, unpredictable—yet we think you’ll be surprised by the findings.
Companies Are Trimming IT Budgets...
Forrester Research said on Sept. 9: "More than 40 percent of large businesses have cut their IT budgets this year due to the global economic slowdown, according to a new survey by Forrester Research, Inc. The Forrester Business Data Services report surveyed nearly 950 senior IT managers across North America and Europe regarding their IT services spending and overall services strategies and priorities."
Forrester Research said on Sept. 12: "Growth in US IT purchases will slow in 2008-2009." The company said U.S. IT growth would slow from 7% between 2006-2007 to 5.4% between 2007-2008.
Others Agree IT Spending Will Grow—Modestly
Garter said on Aug. 18: "Despite current economic concerns, worldwide IT spending will exceed $3.4 trillion in 2008, an increase of 8 percent from 2007 spending, according to Gartner, Inc. Analysts said much of this growth is based on the decline in the U.S. dollar. The estimated worldwide IT spending growth expressed in constant currency is forecast to be approximately 4.5 percent."
But Software Spending Will Grow Solidly
Gartner also said on Aug. 18: "Worldwide software spending is on pace for the strongest growth rate in 2008 at more than 10 percent." The research firm said worldwide software spending would increase from $178 billion in 2007, to $196 billion in 2008 and reach $211 billion in 2009. Note: those numbers, however, shows growth slowing a bit from 10% to 8% during that span.
As Will IT Services...
Gartner added on Aug. 18: "IT services spending ranks a close second [behind software] with more than 9.4 percent growth. Analysts said the IT services sector benefits from the continued innovation in software technology. New software solutions often require labor-based services to implement them." Gartner said IT services would grow from $748 billion last year to $819 billion this year—at 10% climb
And Telecommunications Spending...
Gartner said on Sept. 17: "The worldwide telecommunications market is on pace to reach $2 trillion in 2008, a 7.6 percent increase from 2007 revenue of $1.8 trillion."
And Server Spending...
IDC said on Aug. 27: "According to IDC's Worldwide Quarterly Server Tracker, factory revenue in the worldwide server market grew 6.4% year over year to $13.9 billion in the second quarter of 2008 (2Q08). This is the ninth consecutive quarter of positive revenue growth and the highest Q2 server revenue since 2000. Unit server shipments grew 11.1% year over year in 2Q08 driven by a sustained refresh cycle and an expansion of infrastructures across enterprise, SMB, and cloud computing environments."
IDC, however, added the following: "Although volume systems revenue grew 2.1% in 2Q08, they underperformed the market for the first time since 4Q06 as server OEM's experienced strong pricing pressure in the marketplace…. [T]he pricing challenges many OEMs experienced, particularly in the x86 server market, is a concern as it may foreshadow a slowdown in market demand as enterprise budgets face further scrutiny in the second half of 2008.'" The last quote was attributed to Matt Eastwood, group vice president of Enterprise Platforms at IDC.
And Storage Software Spending...
IDC said on Sept. 8: "According to IDC's Worldwide Quarterly Storage Software Tracker, the worldwide storage software market experienced its 19th consecutive quarter of year-over-year growth in the second quarter of 2008 (2Q08) with revenues of $3.1 billion, a 14.2% increase over the same quarter one year ago. This was the first time that the worldwide storage software market surpassed $3 billion in revenues in a single quarter…. The storage software market continued to enjoy strong growth as perceptive users have put more applications and more data under storage software control."
And Disk Storage Spending
IDC Said on Sept. 5: "Worldwide external disk storage systems factory revenues posted 16.7% year-over-year growth totaling $5.1 billion in the second quarter of 2008 (2Q08), according to the IDC Worldwide Disk Storage Systems Quarterly Tracker. For the quarter, the total disk storage systems market grew to $6.9 billion in revenues, up 10.9% from the prior year's second quarter. Total disk storage systems capacity shipped reach 1,777 petabytes, growing 43.7% year over year. 'Despite concerns about a 2008 slowdown in IT spending, external disk storage systems spending experienced strong growth in the first half of 2008,' said Natalya Yezhkova, research manager, Storage Systems at IDC.'"
And IT Spending Is Seen Increasing Next Year—And Beyond
Forrester Research said on Sept. 12: "2009 will be the start of a new period of IT growth and innovation—once the effects of a 2008 recession wear off." The research firm sees growth in IT spending increasing 6% between 2008 and 2009 and 10% between 2009 and 2010.
This report was compiled by John McCormick. E-mail John at
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