Battle of the IT Spending Forecasts

"Listen, don't really matter to me
Baby, you believe what you wanna believe"
--from "Refugee" by Tom Petty

You don't have to live like a refugee...but if you're a partner, you do have to pay attention to IT spending forecasts. They're a decent gauge of how much money is going to be in your bank account in the next few months. And, as with so many things in the industry, IT spending forecasts might as well be IT spinning forecasts, so full are they of differing angles and brave predictions. Let's try to go from best to worst with what we've seen lately.

One caveat: these forecasts are done by different firms, use different people in their surveys (although some respondents are bound to overlap) and aren't necessarily out to come up with the same types of numbers. Some focus on what we've seen so far in 2009, others on what the year as a whole will bring. So, this isn't necessarily an apples-to-apples-to-apples comparison. But it's an interesting exercise nonetheless, and all three of the reports we're looking at do deal with the broad topic of IT spending.

A couple of weeks ago, the folks at Robert Half Technology, an IT staffing specialist, managed to sound somewhat upbeat about IT spending, noting that CIOs aren't going to stop spending despite the fact that the rest of 2009 is likely to be tough. Here's a quote from the article linked above:

"'Although times are lean, many companies are finding that they can't afford to postpone IT investments that lead to increased security, efficiencies or revenues,' said Dave Willmer, executive director at Robert Half Technology, in a statement. 'Organizations also are trying to make sure they are prepared for growth when conditions improve, and enhancing their IT infrastructure is part of that process.'"

Hey, that doesn't sound so bad! Now, the folks at Robert Half aren't necessarily saying that IT spending will increase over the course of 2009, but they seem to be painting a mostly rosy -- or rosier than expected -- picture of this year's corporate IT budgets.

Forrester, however, puts a somewhat less optimistic spin on the situation, with the summary of Andrew Bartels' spending report sounding almost dire:

"The steep drop in economic growth in Q4 [2008] both caused and reflected a similar fall in tech purchases. As a result, we now expect US business and government purchases of IT goods and services to decrease by 3.1 percent in 2009, compared with the 1.6 percent increase we had previously projected for the year."

Ouch. That's not so rosy, although Bartels does say that spending will increase when the U.S. economy starts to rebound at the end of 2009. We'll see about that.

And then there's Gartner's Mark McDonald (who is not, as far as we know, a former Doobie Brother), who goes into great detail about just how bad things have been thus far in 2009. Spending declined by a weighted average of 4.7 percent in Q1, McDonald says, which sounds brutal and looks even more brutal in chart form, with a huge red bar sinking below the axis while happy gray bars precede it.

But McDonald says that it's unlikely that most CIOs will cut budgets any further for the duration of 2009, which is good news. The bad news for the channel? Less of the money that's being spent is actually making its way to partners, at least to those partners involved in consulting and the like:

"CIOs reported shifting more work to in-house resources more than reducing IT project investments. Few, only 9 percent, see increased use of outsourcing as a way to address the budget challenge."

Boo! The glimmer of hope in McDonald's report -- and it's barely a glimmer -- is that, and we quote, "CIOs expect the economy to recover between the first and third quarter of 2010." Uh, that's kind of a long time, especially when revenues at partner companies are already starting to dry up. Hopefully some of that money that's being hoarded in-house will make its way back into the channel in the next year or so.

We'd like to believe, too, that Forrester's forecast of a rebound at the end of 2009 will be more accurate than the prediction of a bounce some time in 2010. But, as Tom Petty sang at the outset of this entry, "You believe what you want to believe." The economy has to come back some time, though. If Tom were to offer his wisdom to us again, he might say that the waiting is the hardest part.

How's your 2009 looking, either from the IT spending perspective or from the partner revenue perspective? Sound off at [email protected].

Posted by Lee Pender on June 09, 2009