IDC Sees Steady Growth in IT Spending

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Overall enterprise spending on information technology personnel and solutions is projected to increase a steady, if not spectacular, 7 percent during the next 12 months, the organization’s most recent FutureScan report shows. Yet there may be a good deal more activity in the IT market in the coming year than that figure would suggest.


IDC’s FutureScan, a monthly survey of CIOs, IT professionals and line-of-business executives, creates a steady stream of information on IT spending that IDC researchers evaluate over time, said John Gantz, IDC’s senior vice president of research. “The users that we pull month after month tend to be a little more optimistic than we are in terms of total IT spending—maybe they need to be,” he said. “For a number of months, the supply side was much different from the demand side in terms of view of spending. They’ve come a bit more in line now.”


Their predictions also aren’t too far off from IDC’s own forecasts, Gantz said. “We’re expecting very modest growth—5 to 6 percent in IT spending—over the next five years. That’s pretty modest compared to where we were back in 1996 to 2000. We look at the aggregates, so we tend to be a lot more accurate than any one single survey of users.”


However, the most interesting aspect of IT outlays this year and beyond might not be how much organizations are spending, but rather what they’re spending it on. Gantz detailed a new industry trend that he termed “dynamic IT,” an interrelated set of advancements and upgrades in applications, infrastructure and information. “It’s like you’re changing the engine of a car piece-by-piece while it’s running,” he said. “As a result, once we get far enough down the line to where those IT systems can be much more flexible, then there won’t be such an impediment to growth. We talk about a software complexity crisis, meaning there’s so much software installed in developed countries like the U.S. that if you want to make a major new application, it takes forever because you have to link it to all this legacy software. Dynamic IT will free us from the constraints of legacy systems when we’re developing new applications.”


“Unless you’re in IDC (author’s note: or a CertMag EXTRA reader), it’s practically undetectable,” he explained. “It’s replacing this set of computers for another, slightly different set with a little more software that enables them to do things that they couldn’t do before. At the same time, it’s swapping out old stuff for new stuff that will be able to turn on a dime and allow companies to have a much quicker cycle time: faster inventory turns, real-time understanding of the supply chain, constant contact with their customers and the ability to deploy their own assets on a daily basis instead of off of monthly reports.”


With this migration will come the need to add IT staff to support these new solutions, driving a rebound from the previous few years in IT hiring. “During the worst of the downturn from 2002 to 2003, companies really did cut IT,” Gantz said. “We surveyed them at the time and found that they also cut marketing, advertising and just about everybody. IT didn’t get hit as bad as a lot of other groups, but it did get hit. Then there was a period of ‘Let’s do more with less and still cut costs, if not people in IT,’ including maybe outsourcing something. They were looking to cut costs because revenues were going down or remaining flat. Now, the economy’s improved, and they need IT (personnel) to get those revenues.”


As far as IT industry niches go, security and convergence (especially cell phones) are expected to be big, but Gantz said the software sector may be one to watch. “Software is going to be the most interesting market, because for 20 years it grew in double digits, sometimes up to 20 percent. Then all of a sudden in 2002 and 2003, it dropped below 5 percent. Now it’s inching back up to 10 percent. That’s one of the most dramatic changes. The services market tends to follow both the software and the hardware markets.”


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