Gartner: No Recession for Information Technology by a Long Shot

08/19/2008

Gartner just released projections that worldwide IT spending will grow by eight percent in 2008.



ebizQ received the following:

Gartner, Inc. just released estimates that despite current economic concerns, worldwide IT spending will exceed $3.4 trillion in 2008, an increase of 8% from 2007 spending. While analysts said much of this growth is based on the decline in the US dollar, worldwide IT spending growth will still come in at 4.5% in constant currency.


For SOA to be efficient, governance is a must. Learn more in ebizQ's upcoming SOA Governance Virtual Conference.

"The U.S.-led economic downturn shows no sign of causing a recession in IT spending," said Jim Tully, vice president and analyst at Gartner. "In subsequent years we will see reduced growth, but the fundamentals remain strong. Emerging regions, replacement of obsolete systems and some technology shifts are driving growth."

Gartner analysts said many important strategic issues are facing the IT industry, however. "Organizations are switching from company-owned hardware and software assets to per-use service-based models. This will impact the industry in various ways," Tully said. "The projected shift to cloud computing, for example, will result in dramatic growth in IT products in some areas and in significant reductions in other areas. In general, assets will be utilized with greater efficiency, and we are assuming that the overall effect on market growth will be neutral. We also recognize that there is considerable upside potential for higher growth."

Worldwide software spending is on pace for the strongest growth rate in 2008 at more than 10%. IT services spending ranks a close second with more than 9.4% growth. Analysts said the IT services sector benefits from the continued innovation in software technology. New software solutions often require labor-based services to implement them.

"Most companies updated their software systems during the period 1997 through 2001, so we are in the middle of an upgrade cycle that should extend past the end of this decade," said Joanne Correia, managing vice president at Gartner. "However, the replacement of systems does not automatically equate to new software market growth. Software as a Service (SaaS)/cloud computing, service oriented architecture (SOA)/Web 2.0, and open source software are causing huge changes to the software market. Many of these factors are impacting market growth as enterprises replace assets with per-use services."

IT spending is dominated by services rather than products. Together, IT services and telecom services account for 70% of total IT market spending. Gartner analyst said the telecom sector has a major effect on overall IT market performance, accounting for almost $2 trillion in 2008.

"Legacy telecom services have a dampening effect on sector growth, and therefore on the overall IT market," said William Hahn, principal research analyst at Gartner. "The dominant size of the telecom services market guarantees that even with the forecast for relatively slow growth, it will still comprise over 44% of the IT market in five years time."

The outlook for IT services market growth has improved despite macroeconomic uncertainty. "Spending in IT services is being supported by two main factors," said Kathryn Hale, research vice president at Gartner. "Businesses are investing in improvements to internal processes aimed at reducing costs, while often maintaining some of the prior interest in innovation. The second factor is that globalization allows IT services providers to mitigate the risk of weakening demand by operating in more markets."

The main area of hardware growth activity is PCs, which represents 60% of total hardware spending. Growth in PCs is stronger than previously expected, with no signs of a slowdown. The U.S. forecast has increased marginally while forecasts elsewhere, particularly Asia/Pacific and Western Europe, have increased significantly. "The market growth outside of the U.S. and the effects of the weak dollar are major factors in growth in U.S. dollar terms. In addition to regional shifts, a strong shift to mobile PCs is occurring. The higher prices of these products result in increasing revenue per unit and a boost to the overall market," Tully said.

  • Subscribe Newsletter
  • Contribute
Subscribe to ebizQ:

Enter your email address:

 Subscribe Blog Updates via RSS

 Subscribe News via RSS

ebizQ is very interested in what you have to say. To contribute an article, an opinion, or to become a blogger, please contact Peter Schooff.

  • Virtual Conferences
  • Webinars
  • Roundtables

SOA Cloud Qcamp

June 3, 2009

One of the most compelling trends in the enterprise business technology space over the past year has been the emergence of cloud computing. In ebizQ’s upcoming Qcamp virtual un-conference, leading industry experts and practitioners will explore the role of service-oriented architecture (SOA) and business process management (BPM) in supporting cloud-computing initiatives. Additionally, the new skills that developers and IT managers need for successful cloud development will be discussed.Register

View All Virtual Conferences

Smart Case Management: Why It's So Smart.

Date:Nov 05, 2009
Time:12:00 PM ET- (17:00 GMT)

REGISTER TODAY!

Date:Oct 29, 2009
Time:15:00 PM ET- (19:00 GMT)

REGISTER TODAY!
View All Roundtables
  • White Papers
  • Podcasts
  • Blogs

Joe McKendrick: Part II of II: Designing Evolve-ability into SOA and IT Systems

In part two of Joe McKendrick's recent podcast with Miko Matsumura, chief strategist for Software AG, they talk about how SOA and IT systems need to change and grow and adapt with the organization around it.

Listen Now

Phil Wainewright: Helping Brands Engage with Social Media

Phil Wainewright interviews David Vap, VP of products at RightNow Technologies, and finds out how sharing best practices can help businesses understand how best to engage with online communities.

Listen Now

Peter Schooff: Making Every IT Dollar Result in a Desired Business Outcome: Scott Hebner of IBM Rati

Scott Hebner, Vice President of Marketing and Strategy for IBM Rational, discusses a topic on the top of every company's mind today: getting the most from IT investments.

Listen Now

Jessica Ann Mola: Where Will BI Fit In? Lyndsay Wise Explains

In BI, this tough economy and the increasing role of Web 2.0 and MDM are certainly topics on people's minds today. WiseAnalytics' Lyndsay Wise addresses each of them in this informative podcast.

Listen Now

Dennis Byron: Talking with...Deepak Singh of BPM Provider Adeptia

Deepak Singh, President and CTO of Adeptia, joins ebizQ's Dennis Byron in a podcast that gets its hand around the trend of industry-specific BPM.

Listen Now
More Podcasts
  • Most Read
  • Quick Guide
  • Most Discussed

Quick Guide: What is BPM?

Learn More

Quick Guide: What is Event Processing?

Smart event processing can help your company run smarter and faster. This comprehensive guide helps you research the basics of complex event processing (CEP) and learn how to get started on the right foot with your CEP project using EDA, RFID, SOA, SCADA and other relevant technologies. Learn More

Quick Guide: What is Enterprise 2.0?

A lot of people are talking about Enterprise 2.0 as being the business application of Web 2.0 technology. However, there's still some debate on exactly what this technology entails, how it applies to today's business models, and which components bring true value. Some use the term Enterprise 2.0 exclusively to describe the use of social networking technologies in the enterprise, while others use it to describe a web economy platform, or the technological framework behind such a platform. Still others say that Enterprise 2.0 is all of these things. Learn More