Good news: IT spending out of step with economic cycle



When IDC forecast global IT spending earlier in the year would remain the black, it did not foretell the utter collapse of the IT industry. Instead it suggested that while demand will be down in all regions it would not be catastrophic. Seemed odd at the time - surely, IT spending would mirror the general economic trends and head south very quickly.
Well according to venerable IDC chief analyst John Gantz, speaking at Orange Business Live in London, the IT spending cycle doesn't always follow economic cycles. With decades of experience, Gantz pointed out that that the current economic crisis is not necessarily leading to a crunch in IT spending. The last great depression in IT was 2001 (remember the dotcom bubble, satellite bubble and expensive 3G license fees?) yet the general economy was not suffering at the time. 
According to Gantz, to assess the impact the economy will have on ICT spending, we need to take the long view because IT spending cycles are singing to a different tune. Looking at the US economy over the last 50 years, and the IT spending during the same period, Gantz said "1982, a bad year for the economy, a great year for IT. 1984 was a great year for the economy, a bad year for IT. The same in 2002, a mild slowdown in the economy, a disaster in IT. In fact the biggest IT collapses have NOT coincided with the biggest economic collapses, but instead have been part of a long term IT boom and bust cycle." IT has its own cycles and fortunately we are in the right part of the bell curve to be facing a financial crisis. "Without knowing it, we have been getting ready for a crisis for 5 years. No need to freak out," he said.
Echoing Forrester's Mike Cansfield earlier in the day, Gantz also believes that this is the ideal time for companies to leverage IT to transform their business. "I think the real impact of the economic crisis will be as an agent for change. Change that might not always be far as I can see no company transforms itself willingly. Usually it's only under threat and duress. Schwab's threat from Etrade, Merrill Lynche's threat from Schwab. Microsoft's threat from Netscape. British Airways threat from Ryanair."
Gantz identified some key technologies that companies should be using to transform their business and resist newcomers. These include: 
  • Security management
  • Mobile data
  • Enterprise social media
  • Business analytics
  • IT outsourcing & BPO
  • SaaS
  • Virtual machines.
  • Search and discovery
  • Storage replication
  • IT automation
And his recommendations for technologies/ issues to watch were:
  • Visualisation management software
  • Real-time analytics
  • Ethical hacking.
  • IT-driven sustainability
  • Location-based services
  • Video search
  • Compliance
  • Reputation management software
  • M2M
Stewart Baines
Stewart Baines

I've been writing about technology for nearly 20 years, including editing industry magazines Connect and Communications International. In 2002 I co-founded Futurity Media with Anthony Plewes. My focus in Futurity Media is in emerging technologies, social media and future gazing. As a graduate of philosophy & science, I have studied futurology & foresight to the post-grad level.