News

Gartner: IT Budgets, Spending Set for Rebound

• By David Nagel
• January 22, 2010

Worldwide IT spending and IT department budgets are set to make something of a comeback following 2009's drastic declines. Furthermore, all major segments in IT are expected to see positive growth in 2010, according to two separate reports released this week by market research firm Gartner.

'Slow but Steady Growth'
According to one report, released Thursday, IT spending worldwide will climb 4.6 percent in 2010 to $3.364 trillion. Richard Gordon, research vice president at Gartner, said this increase came a bit sooner than previously anticipated.

"Last quarter, we did not expect to see IT spending levels recover to 2008 levels until 2011," Gordon said in a statement. "However, now, with the upward revision to the current dollar forecast, we are projecting that global IT spending this year will approach the level seen in 2008."

Gartner said the United States and Japan will see some of the slowest growth, at 2.5 percent and 1.8 percent respectively, while emerging markets will lead the way, with 9.3 percent growth predicted for Latin America, 7.7 percent in the Middle East and Africa, and 7 percent in the Asia/Pacific region. Western Europe is expected to experience 5.2 percent growth in IT spending in 2010.

In terms of IT categories, services will see the most growth, according to Gartner's forecast, climbing 5.6 percent to $824.2 billion. IT services spending had declined 3.5 percent in 2009 to $780.9. The modest 1.6 percent increase projected for overall computer hardware spending (to $331.7 billion) will follow a steep 13.9 percent decline experienced in the previous year. Software spending is projected to grow 4.9 percent to $231.5 billion. And telecom is expected to grow 4.7 percent to $1,976.6 billion.

Budgets on the Rise
Meanwhile, worldwide, CIOs have also indicated that their budgets will begin to recover somewhat from 2009's free fall. In a separate report released Tuesday, Gartner Executive Programs indicated that IT budgets across all sectors will increase "by a weighted global average of 1.3 percent in nominal terms, compared with 2009 levels where IT budgets declined 8.1 percent." Gartner described 2009 as "the most challenging year for IT since the survey began in 1999" and said that the miniscule increase would bring IT budgets essentially to their 2005 levels.

For the report, "Leading in Times of Transition: The 2010 CIO Agenda," Gartner surveyed 1,586 CIOs across public and private sectors, representing 27 industries in 41 different countries and accounting for $126 billion in IT spending.

"2009 was the most challenging year for CIOs in the corporate and public sectors as they faced multiple budget cuts, delayed spending and increased demand for services with reduced resources," said Mark McDonald, group vice president and head of research for Gartner EXP. "This is set to change in 2010, as the economy transitions from recession to recovery and enterprises transition their strategies from cost-cutting efficiency to value-creating productivity."

McDonald said the current situation could afford IT departments an opportunity to bring about a change in the role of IT within an organization: "CIOs see 2010 as an opportunity to accelerate IT's transition from a support function to strategic contributor focused on innovation and competitive advantage. They have aspired to this shift for years, but economic, strategic and technological changes have only recently made it feasible."

In addition, the survey also found that CIOs are realigning some of their priorities for 2010. Where business intelligence was the No. 1 priority in surveys from the previous five years, it dropped to fifth position for 2010, replaced by virtualization, with the overall trend shifting to "'lighter-weight' services-based and social media technologies," as Gartner described them.

The top 10 cross-sector CIO priorities for 2010, according to the survey, are as follows:

1. Virtualization
2. Cloud computing
3. Web 2.0
4. Networking, voice and data communications
5. Business intelligence
6. Mobile technologies
7. Data/document management and storage
8. Service-oriented applications and architecture
9. Security technologies
10. IT management