IT heads for growth after record slump

Worldwide spending on IT will return to growth in 2010, but not before the industry endures the last few months of this year that has proved its tightest 12 months on record.



Issuing the forecasts, analysts at Gartner said IT spending was on track to notch up 3.3 per cent to $3.3trillion, once 2009, the worst year ever for IT spending, was over.



Globally, IT expenditure fell 5.2 per cent this year, while for enterprise, it fared even worse and dropped by 6.9 per cent, shows the research based on 10,000 organisations.



Even when IT comes out of the red in 2010, more than half of IT leaders will see only zero growth in their budgets, prompting the analyst to caution against over optimism.



The firm's global head of research, Peter Sondergaard said: "While the IT industry will return to growth in 2010, the market will not recover to 2008 revenue levels before 2012."



"2010 is about balancing the focus on cost, risk, and growth," he said, adding that CIOs should benchmark IT according to business impact, not as a fraction of revenue.



However, IT budgets will be zero per cent or less in growth terms for the majority of CIOs throughout the year, and will only slowly improve in 2011, Gartner said.



In 2010, spending on hardware ($317billion) will be flat, following a 16.5 per cent cutback this year, while spending on telecoms ($1.9trillion) will grow 2 per cent, having sunk 3.2 per cent in 2009.



Global spending on IT services, which is due to total $781billion this year, is on track to for an even bigger growth rate - 4.5 per cent - outdone only by spending on software, which will grow 4.8 per cent.



But 2010 will also be a time of new considerations for IT leaders – the three key ones being a shift on expenditure from capital to operational; ageing hardware and the need to make compelling business cases.



Beyond 2010, a 12-month period that will see the continued rise of social media, business intelligence and virtualisation, the central topics that will fashion IT agendas will change.



The three major themes Gartner identified were:



1. Context-Aware Computing — the concept of leveraging information about the end user to improve the quality of the interaction. Emerging context-enriched services will use location, presence, social attributes, and other environmental information to anticipate an end user's immediate needs, offering more sophisticated, situation-aware and usable functions.



2. Operational Technology — OT is devices, sensors, and software used to control or monitor physical assets and processes in real-time to maintain system integrity. The rapid growth of OT is increasing the need for a unified view of information covering business process and control systems. OT will become a mainstream focus for all organisations.



3. Pattern-Based Strategy — A new model about implementing a framework to proactively seek, model, and adapt to leading indicators, often termed "weak" signals, that form patterns in the marketplace, and to exploit them for competitive advantage. A Pattern-Based Strategy will allow an organisation to not only better understand what's happening now in terms of demand, but also to detect leading indicators of change, and to identify and quantify risks emerging from new patterns rather than continuing to focus on lagging indicators of performance.



Change was also forecast as incoming to the IT industry on a regional basis – most visibly in emerging economies, whose strong growth was predicted to muscle Silicon Valley out of the driving seat.



Sondergaard said: "By 2012, the accelerated IT spending and culturally different approach to IT in these economies will directly influence product features, service structures, and the overall IT industry."