Gartner sees global IT spending growth in 2010

Has the recession bottom yet? With consumers hesitant to buy and enterprise slashing IT budgets, how will companies position themselves in 2010? Accordingly to the last report from Gartner, “global IT spending is on track to mark its worst year ever, but global tech spending will climb 3.3% to $3.3 trillion in 2010.”

“2010 is about balancing the focus on cost, risk, and growth. For more than 50% of CIOs the IT budget will be 0% or less in growth terms. It will only slowly improve in 2011,” said Peter Sondergaard, senior vice president at Gartner.

While this is not exactly the kind of news we like to hear, the research firm also offers 3 budgeting advice:

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 scalable and elastic. CIOs need to model the economic impact of IT on the overall financial performance of an organization.
   
   
2. Impact of the Increased Age of IT Hardware — With delayed purchases of servers, PCs and printers likely to continue into 2010, organizations 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% of the global installed base. In 2010, it will be at least 2 million.
   
   “If replacement cycles do not change, almost 10% of the server installed base will be beyond scheduled replacement be 2011,” Mr. Sondergaard said. “That will impact enterprise 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.

Sounds familiar? We're no research firm but we're glad we're heading towards the right direction. Here is why:

Number 1.Everything that Pointivity offers requires no up-front capital, just pay-as-you-go making it operational expense in nature. From our Hosted Application to total IT outsource with iTOS, our pricing model allows the contract to fluctuate monthly without costly changes or renegotiation.

Number 2. All of our hosted solutions includes upgrades and updates so our customers never have to worry about patches, new versions or licensing renewal fees. Everything is included when we deliver your IT solution. We take the risk out of building and managing your own IT so you can focus on your core business. Let our experts handle keeping up with IT.

Number 3. We’ve been delivering custom IT solution to our customer via iTOS for years, just checkout some of the case studies to see how our customers have benefited.

The bottom line: iTOS is a business strategy because we do business with your bottom line in mind.

Meeting SMB IT Priorities

As more economic signs point to the bottoming of this recession, companies are starting to reposition themselves by aligning IT strategy with business goals. According to the latest survey by Forrester Research, top priorities for small and midmarket businesses are "improving IT efficiency and streamlining business processes. 15% say that this is a critical priority while 45% of SMBs say they are working on initiatives around this."

The key take away is that IT strategy is now business strategy. Smart companies are serious about leverage IT to improve all facets of operations. It's about doing more with less by investing in IT to reduce costs and improve performance. Looking ahead, IT solution providers, VARs and MSPs will need to transition into more of a strategic role that focuses on solving business problems instead of technology challenges.

Here are some highlights from the survey:

• Top goals within IT organizations are improving end-user work force productivity, managing customer relationships, and acquiring and retaining customers.
• Hardware spending, led by server and networking equipment is facing more cuts than software spending.
• Software spending is being led by security technologies – 25% of SMBs say they plan to increase spending here while 29% say they plan to decrease it.

Gartner and Forrester: 2009 IT Spending will Decline

U.S. jobless claims surged to a 26-1/2-year high last week, delivering yet another bad news to the economic downturn. Many experts believe that economy will get worse before it gets better.

"Market research firms Gartner and Forrester have both revised their IT spending forecasts for 2009 and now say IT spending will decline this year due to a deeper-than-expected recession. Gartner says the drop will be deeper than after the dot-com bust." according to Channel Insider.

The credit crunch has impacted IT capital purchases very hard and the only area Forrester projects as set for growth is outsourcing.

"Forrester’s forecast calls for computers and peripheral equipment sales to decline by 6.7 percent in 2009, communications equipment sales to fall by 7.7 percent, software sales to fall by 0.4 percent, IT consulting services sales to fall by 1.9 percent and IT outsourcing sales to grow by 2.1 percent in 2009"

Many technology providers have already experienced the decline in business for a while now and the forecast simply confirms the fact that businesses are not willing to spend the big capital investments (CAPEX is dead!) and is looking to cut IT budgets with the combination of moving to lower-cost alternatives, extending the lifecycle of existing products and laying off inefficient resources.

When economy is bad there is a rush to quality, a shift in spending and a higher expectation to do more with less. This is why technology providers must deliver a competitive offering to retain existing customers and to find new business opportunities utilizing the outsourcing IT model. From Pay-as-you-go hosted services to the all-inclusive per user/per month Total Outsourced Solution, Pointivity has been delivering the OPEX IT subscription model for years and we have the go-to-market strategies for our partners to deliver the same successful solution.

Do you have the right strategies to navigate through this perfect storm? Can you deliver more value than your competitors? Contact Pointivity to learn more on how we can help.

Link to Gartner Press Release.
Link to Forrester report.