What You Ought To Know About IT Spending Recovery in 2010

While we’ve seen recent indications of economic recovery, some are skeptical that IT spending will follow the trend. For the past year, CIOs have been strapped with tighter-than-ever IT budgets.  This week, Microsoft’s CEO offered his thoughts on why we will see growth in IT spending, but we will not see recovery. Here’s what you ought to know.

Steve Ballmer, Microsoft CEO,  stated that IT spending will not fully recover to levels seen in recent years in the short term.  Cited reasons:tight-budget-300x217

  • Capital less available
  • Drop in server and PC purchases
  • Tighter IT budgets

Well, I’m not convinced that capital is scarce.  It would seem that with increased corporate earnings from cost-savings measures, and with money on the sidelines for lending, that capital is not as scarce as some would like to believe.  Either way, spending has been scarce.

Regardless, Ballmer must have read last month’s Garter Group statement, which indicated that we won’t see 2008 IT spending levels again until 2012!

Doesn’t that sound horrible?

Not so fast.

If Garter is correct, 2010 will feel like an enormous improvement.  The 2009 forecast for IT spending is horrendous.  Hardware down 16.5% year over year.  (Side note, declines in new hardware purchases put a serious pinch on Microsoft, which bundles OS licenses with new servers and PCs.)  Enterprise IT purchasing down 6.9%.  Overall global technology spending down 5.2%.

Gartner forecasts a modest but respectable 3.3% increase in 2010 global IT spending, equal to $3.3 trillion.

While Ballmer and Gartner predict 0% change in IT budgets from 2009 to 2010, we at 3coast are seeing a modest increase in IT department budgets in 2010.  Plans are being made to replace headcount lost in the past twelve months and resume some projects that were put on hold.  On the other hand, we are also seeing companies work to extend the life of servers and PCs, which will continue to hurt hardware vendors and Microsoft.  However, everyone in IT knows that hardware will need to be refreshed eventually.  This bodes well for 2011.

In addition, we have reason to believe that while most enterprise organizations have implemented virtualizationto some degree, many mid-market and SMBs are at the outset and plans are queued for 2010.

Personally, I’m optimistic for 2010 (especially relative to 2009) and will be even more so for 2011 … so long as the global economy continues to cooperate as it has in recent months.

But hey, I’d love to be even more confident.  Please comment on what your company is doing in the way of IT budgets in 2010.  Up, down, flat.

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