The Good News About Spending

By Scott Ferguson  |  Posted 2008-09-30 Print this article Print

Right now, IDC is calling for IT spending to grow about 4 percent in 2008 compared with the 8 percent growth the United States saw in 2007. Minton said it could take another few months to determine whether IT spending will slow more or even out. A good deal depends on whether the White House and Congress agree to a bailout and what impact those funds would have on Wall Street.

Andrew Bartels, an analyst with Forrester Research, said he believes a lot of spending decisions are different for each individual industry. While banking and financial services have slowed down, other sectors such as media companies and health care will continue to spend, although IT managers could become cautious, he said.

"If you're at Lehman Brothers, you might have to cut 20 percent," Bartels said. "If you're at Merrill Lynch or if you're at Wachovia and there is going to be consolidation, then there are certain things that are going to have to be put on hold because you don't want to make decisions right now.

"If you're outside of those extremes, the much more common approach is going to be cautious, [to] proceed with what we have and try to avoid major new commitments. However, you don't want to run [too far] either way."

In the case of PCs, for example, Bartels said he believes spending on new notebooks and desktops may pick up by the middle of 2009, since the cost of servicing old PCs could begin to outweigh the cost of upgrades to new hardware. In addition, many companies have already delayed purchases of new PCs and time may be running out

One factor that might help is that prices for PCs continue to fall, as vendors look to cut prices on both the consumer and enterprise sides in order to keep shipments up for the year.

However, Minton cautioned that IT managers can still hold off on buying servers and PCs if the companies they work for tighten the budget belt in 2009.

"The first thing companies do is start making their hardware last longer, and they are able to do that because their hardware isn't really breaking down," Minton said. "When you talk about PCs, and to an extent data centers, there are drivers to upgrade this stuff. To an extent, we have already seen this in sectors that have slowed down in 2008. A big indication of what an IT company does with its spending can be seen in its hardware upgrades."


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