Worldwide IT Spending Down Six Per Cent – What Does It Mean

Worldwide IT Spending Down Six Per Cent – What Does It Mean

Gartner predicted as recently as July that worldwide IT spend in 2009 would be six per cent lower than in 2008.  This figure looks bad enough, but when broken down further some of the figures look dismal – 16% lower spend on IT hardware particularly.

Steve Pinder, GlassHouse Technologies (UK) principal consultant finds out if this means financial Armageddon for IT suppliers, what are the main reasons for these predictions, and if there is an end in sight. 

The economic downturn that almost every market sector experienced has led to IMF predicting that worldwide GDP will show a meagre growth of 0.5% in 2009. The advanced economies fare much worse than this, with the OECD predicting that the economies of the G7 group of nations will contract by 3.7%.  

With IT comprising a larger element of GDP for the G7 nations, this contraction can go a long way to explaining some of the reduction in IT spending predicted by Gartner.  Further trends in the market, such as the adoption of newer technologies and virtualisation, and the disappearance of many organisations, could account for much of the remainder. 

Traditionally hardware performs badly in a downturn relative to other areas of IT, so it’s no wonder Gartner predicted spending would be down 16 per cent here. It is much easier for organisations to defer a hardware refresh for a year or so than to walk away from an outsourcing contract or services deal.  

Further reasons for such a dramatic reduction in hardware are that IT departments are becoming more aware of utilisation statistics within their estates and beginning to take steps to address this wastage. 

As for software spending down 1.6 per cent; it is not always as easy to defer software purchases as it is to defer those for hardware.

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