IT Spending Will Rebound in 2010: Gartner

Gartner analysts say the IT industry will follow up its worst year ever by seeing a 3.3 percent increase in spending in 2010. However, while there is cause for cautious optimism, corporate IT budgets will still be relatively flat, and the hardware space will still struggle. In addition, IT revenues won't reach 2008 levels until 2012, they said during their Gartner Symposium/ITExpo 2009 event.

After enduring its worst year ever, the IT industry can expect to rebound in 2010, with a 3.3 percent increase in spending, according to Gartner analysts.

But as they enter 2010, IT professionals are going to have to make some tough decisions, deal with continued stagnant budgets and negotiate a changing landscape, the analysts said Oct. 19 at the Gartner Symposium/ITExpo 2009 in Orlando, Fla.

Overall, the IT industry's outlook will improve, but the players shouldn't be overly optimistic about what they'll see in 2010, according to analyst Peter Sondergaard. The industry won't see 2008 revenue levels until 2012.

"[Next year] is about balancing the focus on cost, risk and growth," Sondergaard said in a statement. "For more than 50 percent of CIOs, the IT budget will be 0 percent or less in growth terms. It will only slowly improve in 2011."

The battered hardware industry saw spending in 2009 drop 16.5 percent, to $317 billion, and spending will be flat next year. By contrast, the telecommunications hardware business will see a 4 percent decline, and spending will grow in 2010 by 3.2 percent, according to Gartner.

IT services spending will jump 4.5 percent next year, and software spending will grow 4.8 percent.

Sondergaard told IT professionals at the show that there are three trends they need to deal with in the coming year, the first being the shift in spending from capital costs to operational costs, particularly as such models as cloud computing take hold.

IT administrators also will need to figure out how to deal with the aging hardware in their infrastructures. Older systems cost money to maintain, are more apt to fail and pose greater security risks than newer ones. Gartner estimates that about 1 million servers worldwide-about 3 percent of the server population-are a year beyond their replacement dates. That could grow to 2 million next year.

"If replacement cycles do not change, almost 10 percent of the server installed base will be beyond scheduled replacement be 2011," Sondergaard said. "That will impact enterprise risk. CFOs need to understand this dynamic, and it's the responsibility of the CIO to convey this in a way the CFO understands."

In addition, CIOs need to be able to make a compelling business case for every expenditure, he said.

Other trends that IT professionals will need to keep an eye on will be the continued use of business intelligence software, virtualization and social media.

Other important trends that are ramping are context-aware computing-or the ability to leverage information, such as location and social attributes, about end users to improve interactions-and what Gartner is calling "operational technology." OT is devices, sensors and software that enable the dynamic and real-time control and monitor physical assets and processes.

In addition, pattern-based strategies-the ability to create a framework to use leading indicators to get a gauge of the marketplace-can help businesses get a better feel for what not only is happening now but what will happen in the future, the analyst said.