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March 31, 2009

Report: Global IT Spending to Fall 3.8 Percent in 2009


Despite positive forecasts for IT and communications segments such as SaaS, mobile broadband, VoIP calling and video recording devices, a Stamford, Connecticut-based market research firm today is calling for worldwide IT spending decline of 3.8 percent in 2009.



 
The figure – from Gartner Inc. – means IT will see about $3.2 trillion in spending this year, compared to nearly $3.4 trillion in 2008.
 
Rich Gordon, the firm’s research vice president and head of global forecasting, said IT organizations worldwide are being asked to trim budgets, and consumers are cutting back on discretionary spending.
 
“The speed and severity of the response by businesses and consumers alike to these economic circumstances will result in an IT market slowdown in 2009 that will be worse than the 2.1 per cent decline in IT spending in 2001 when the Internet investment bubble burst,” Gordon said.
 
The firm also says in its report, “Gartner (News - Alert) Dataquest Market Databook, March 2009 Update,” that the impact of reduced new sales will be more strongly felt in emerging markets, while the impact of reduced replacement activity will be more strongly felt in mature markets.
 
According to Gartner, consumers and businesses will keep switching to lower-cost products, extending the life of existing devices and extending their current contracts and purchasing agreements.

Click on the table below from Gartner to enlarge it:

 
Yet IT is essential to running most businesses, the firm says, and supporting current complex IT installations is both necessary for continued operations and a strategy for slowing down technology refresh cycles.
 
There are also many ways to leverage IT in order to save money in the long run.
 
One of those ways is through so-called “software-as-a-service,” or “SaaS (News - Alert)” solutions.
 
In general, SaaS is a model of software deployment where an application is hosted as a service provided to customers across the Internet. Think of iTunes, for example. By getting rid of the need to install and run an application on the customer’s own computer, SaaS reduces the cost of software maintenance, operation and support.
 
SaaS has been thriving in this recession.
 
Earlier this month, TMCnet reported that France-based document process automation provider saw 66 percent revenue growth last year on its SaaS products. Citing a report from Gartner Inc., that company – Esker – says the SaaS market is expected to double by 2012 from $6.4 billion last year.
 
Analysts say that it isn’t just IT businesses that should be looking into software-based technologies.
 
As TMCnet reported, one new study says that the U.S. government could save billions by moving to more open source software, virtualization and cloud computing.
 
The 14-slide study – from MeriTalk, online group that studies public policy and IT, as well as Red Hat and DLT Solutions Inc. – says that after years of boosted funding, federal IT managers are facing a new challenge: the budget crunch.
 
“With a grave economic outlook and a new administration in office, Federal agencies will be forced to do more with less,” the study says. “Across 30 key Federal agencies, the government allocated $60 billion for IT infrastructure in FY07, FY08, and FY09. Instead of worrying over a budget stop, why not make the most of the money we are already investing?”
 
According to Gartner, though government stimulus packages likely will be important in the long term, they will not be able to offset a bleak near-term outlook.
 
Gordon said that IT vendors should plan for business and consumer spending to be curtailed during 2009 and for a slow, prolonged recovery during 2010.
 
“At the same time, they should be alert to opportunities to help buyers with cutting costs, complying with new government regulations and taking best advantage of government rescue plans,” Gordon said.
 

Don’t forget to check out TMCnet’s White Paper Library, which provides a selection of in-depth information on relevant topics affecting the IP Communications industry. The library offers white papers, case studies and other documents which are free to registered users.


Michael Dinan is a contributing editor for TMCnet, covering news in the IP communications, call center and customer relationship management industries. To read more of Michael's articles, please visit his columnist page.

Edited by Michael Dinan





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