Magazine article Mortgage Banking

The Wallet

Magazine article Mortgage Banking

The Wallet

Article excerpt

According to Stamford, Connecticut--based Gartner Inc.'s fall 2009 report, Gartner Perspective: IT Spending 2010, "2008 and 2009 witnessed the most severe economic recession in generations, and the IT [information technology] industry suffered an even greater decline than it did during 200" following the [burst of the] dot-com bubble."

Nevertheless, Gartner says, there is great opportunity to plan for growth and enable organizations to take advantage of a recovering economy.

Worldwide IT spending

Gartner predicts the economy will recover, starting near the end of 2009--but tentatively at first. "While initial growth in IT spending in 2010 and 2011 may come as the result, directly or indirectly, of the various government stimulus packages ... there will be a return to more sustained growth in IT spending in 2012 and 2013 as the economic recovery unfolds," the report states.

IT budget cuts may have slowed market growth in the short term, but "enterprises must preserve short-term spending on critical business operations and long-term technology investments" even in the toughest business environments, Gartner says. "IT vendors should be sensitive to the challenges faced by their customers, and plan pricing strategies accordingly."

While the global economic downturn may be easing, IT budgets are still being cut. Gartner forecasts worldwide IT spending will total $3.2 trillion in 2009--a 5.2 percent decrease from 2008 spending of $3.4 trillion. Worldwide IT spending is expected to return to growth in 2010 as revenue is projected to reach $3.3 billion--a 3.3 percent increase from 2009, according to the Gartner report.

Gartner advises IT vendors to do the following during the next two years:

* Reassess changing customer needs and opportunities.

* Rebalance priorities between customer acquisition and retention.

* Provide realistic business return on investment statistics, benchmarks and proofs of concept.

* Re-evaluate and refine partnership programs, relationships and strategies.

Worldwide IT computing hardware

According to Gartner, hardware is the easiest part of IT budgets to cut. Hardware spending is also heavily impacted by the current poor access to credit, both for individuals and companies. "Hardware will therefore see the steepest decline of all segments during 2009," the Gartner report predicts. "The weakest segments are PCs [personal computers] and servers. These segments are impacted by delayed replacement activity and very little new investment."

Worldwide hardware spending is forecasted by Gartner to decline 16.5 percent in 2009 as revenue totals $317 billion. In 2010, hardware spending will be flat with spending totaling $317 billion. Gartner expects 2010 spending to be at a similar level to 2009.

Worldwide software spending

"Cost optimization will benefit alternative software acquisition models as organizations will look for ways to shift spending from capital expenditures to operating expenditures," Gartner states in its report. "Because of this, vendors offering software as a service (SaaS), IT asset management, virtualization capabilities and a good open-source strategy will benefit. However, the still-small portion of spending coming from these technology areas does not have the ability to improve the gloomy outlook for the overall software market."

Gartner expects worldwide software spending in 2009 to be on pace to total $221 billion--a 2.1 percent decline from 2008 spending of $225 billion. It projects software spending to return to growth in 2010, with revenue reaching $231 billion--a 4.8 percent increase from 2009.

Hardware projects continue to be stalled for PCs, servers and storage, further pushing down the new sales of infrastructure software that are dragged by hardware sales. Also, new sales of enterprise application software in the manufacturing and financial sectors have completely stalled as these vertical sectors sort out their long-term viability. …

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