Gartner Says IT Spending to Rebound in 2010 with 3.3 Per Cent Growth After Worst Year Ever in 2009

Analysts Discuss the Future of IT during Gartner Symposium/ITxpo 2009, 2-5 November, in Cannes, France

(PresseBox) ( Orlando, Fla., )
The IT industry is exiting its worst year ever, as worldwide IT spending is on pace to decline 5.2 per cent, according to Gartner, Inc. Worldwide corporate IT spending will struggle more with IT spending dropping 6.9 per cent. The IT industry will return to growth with 2010 IT spending forecast to total $3.3 trillion, a 3.3 per cent increase from 2009.

Gartner provided the latest outlook for the IT industry during Gartner Symposium/ITxpo 2009, which is taking place in Orlando through October 22 and in Cannes on 2-5 November. While IT spending will increase next year, Gartner cautioned IT leaders not to be overly optimistic.

"While the IT industry will return to growth in 2010, the market will not recover to 2008 revenue levels before 2012," said Peter Sondergaard, senior vice president at Gartner and global head of Research. "2010 is about balancing the focus on cost, risk, and growth. For more than 50 per cent of CIOs the IT budget will be 0 per cent or less in growth terms. It will only slowly improve in 2011."

The computing hardware market has struggled more than other segments with worldwide hardware spending forecast to total $317 billion in 2009, a 16.5 per cent decline. In 2010, spending on hardware spending will be flat. Worldwide telecom spending is on pace to decline 4 per cent in 2009 with revenue of nearly $1.9 trillion. In 2010, telecom spending is forecast to grow 3.2 per cent. Worldwide IT services spending is expected to total $781 billion in 2009, and it is forecast to grow 4.5 per cent in 2010. Worldwide software spending is forecast to decline 2.1 per cent in 2009, and the segment is projected to grow 4.8 per cent in 2010.

On a regional basis, emerging regions will resume strong growth. "By 2012, the accelerated IT spending and culturally different approach to IT in these economies will directly influence product features, service structures, and the overall IT industry. Silicon Valley will not be in the driver's seat anymore," Mr Sondergaard said.

From a budget perspective, there are three important items that IT leaders must consider in 2010:

1) A Shift from Capital Expenditure to Operational Expenditure in the IT Budget - Concepts such as cloud services will accelerate this shift. IT costs become scaleable and elastic. CIOs need to model the economic impact of IT on the overall financial performance of an organization. For public companies, they must show how IT improves earnings per share (EPS).

2) Impact of the Increased Age of IT Hardware - With delayed purchases of servers, PCs and printers likely to continue into 2010, organisations must start to assess the impact of increased equipment failure rates, and if current financial write-off periods are still appropriate. Approximately 1 million servers have had their replacement delayed by a year. That is 3 per cent of the global installed base. In 2010, it will be at least 2 million. "If replacement cycles do not change, almost 10 per cent of the server installed base will be beyond scheduled replacement be 2011," Mr Sondergaard said. "That will impact business risk. CFOs need to understand this dynamic, and it's the responsibility of the CIO to convey this in a way the CFO understands."

3) IT Must Learn to Build Compelling Business Cases - 2010 marks the year in which IT needs to demonstrate true line of sight to business objectives for every investment decision. IT leaders can no longer look at IT as a percentage of revenue. CIOs must benchmark IT according to business impact.

Mr Sondergaard said three additional topics that were important in 2009 will continue to dominate IT leaders' agendas in 2010. These three topics include
- Business Intelligence - Users will continue to expand their investments in this area with the focus moving from "in here" to "out there"
- Virtualisation - IT leaders should not just invest in the server and data-centre environment, but in the entire infrastructure. In 2010, users will create the cornerstone for the cloud infrastructure. They will enable the infrastructure to move from owned to shared.
- Social Media - Organisations are starting to scale their efforts in this space. The technologies are improving and organisations realise this is not only about digital natives. It's about all client segments including the most significant: the population in the next ten years, the above-60-year-old generations.

While those topics are key to IT agendas today, Mr Sondergaard highlighted three themes that will become important going forward. They include:
- Context-Aware Computing - This is the concept of leveraging information about the end user to improve the quality of the interaction. Emerging context-enriched services will use location, presence, social attributes, and other environmental information to anticipate an end user's immediate needs, offering more sophisticated, situation-aware and usable functions.
- Operational Technology (OT) - OT is devices, sensors, and software used to control or monitor physical assets and processes in real-time to maintain system integrity. The rapid growth of OT is increasing the need for a unified view of information covering business process and control systems. OT will become a mainstream focus for all organisations.
- Pattern-Based Strategy - This is a new model about implementing a framework to proactively seek, model, and adapt to leading indicators, often termed "weak" signals, that form patterns in the marketplace, and to exploit them for competitive advantage. A Pattern-Based Strategy will allow an organisation to not only better understand what's happening now in terms of demand, but also to detect leading indicators of change, and to identify and quantify risks emerging from new patterns rather than continuing to focus on lagging indicators of performance.

Mr Sondergaard will provide additional analysis on Gartner's latest IT spending projections at the Gartner Symposium/ITxpo 2009, 2-5 November, in Cannes, France. Additional information is available at www.gartner.com/eu/symposium

Members of the media can register for the event by contacting Laurence Goasduff at Laurence.goasduff@gartner.com

About Gartner Symposium/ITxpo
Gartner Symposium/ITxpo is the industry's largest and most important annual gathering of CIOs and senior IT executives. This event delivers independent and objective content with the authority and weight of the world's leading IT research and advisory organization, and provides access to the latest solutions from key technology providers. Gartner's annual Symposium/ITxpo events are key components of attendees' annual planning efforts. They rely on Gartner Symposium/ITxpo to gain insight into how their organizations can use IT to address business challenges and improve operational efficiency.
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