Survey: IT spending to recover in 2010

Goldman Sachs' latest IT spending survey is out and it looks a tech-spending recovery is on the way for 2010. To a large extent, the data suggests not so much that spending is dramatically higher, but that it has normalized at pre-recessionary growth rates, rather than contracting as it has over the past several months.

Goldman is cautiously optimistic about 2010 spending, noting that much of it depends on the macro-economic environment driving more business spending. And while most areas will see growth counter to 2009's downward spiral, some areas such as off-shore development will feel significant retraction.

Regardless, the sentiments are positive and dramatically different than Goldman's report from November 2008 where IT spending was in a total death spiral. What a difference a year makes.

A few key points from the report:

• With recessionary buying cycle clearly through the trough, the remaining question centers on the pace of recovery for 2010.
• Infrastructure, application development, and systems integration remain top spending areas, especially as CIOs start to consider newer technologies such as virtualization and cloud computing.
• There is pent-up demand in hardware most notable, positive for storage and server/PC refresh.
• The appetite for offshore services appears to be below trend at current levels.
• HP, NetApp, CommVault, Red Hat, Riverbed, and Salesforce.com are notable names showing positive upward momentum in our latest survey.

In software, Red Hat and Salesforce.com showed strengthened results with VMware and Citrix remaining top of mind, which Goldman believes to be a good indication of internal and external cloud deployments gaining momentum.

IT Spending in 2010

(Credit: Goldman Sachs IT Spending Survey)

On the desktop Microsoft's Windows 7 is resonating well with CIOs as 94 percent of survey respondents intend to upgrade to Windows 7, underscoring Goldman's thesis that "pent-up demand and a hardware refresh should fuel a robust Windows 7 product cycle." According to the survey:

32 percent expect to upgrade in 2010 (9 percent in 1H, 23 percent in 2H), while another 28 percent anticipate an upgrade in 2011. With the majority of the installed base (around 85 percent to 90 percent) still on Windows XP, and XP support expiring in April 2014, we believe that 2013 becomes a de facto deadline for upgrades.

In regards to professional services, survey results reflect a material uptick in respondents indicating increased budgets for discretionary spending in the next six months, which is consistent with Goldman's view that discretionary IT spending will likely trend upward into 2010 on the back of an improved macro and corporate profit backdrop.

Another interesting area of the survey is which vendors are gaining share of reduced budgets.

PC and Laptop Gaining

Apple Hewlett-Packard Lenovo Dell

Enterprise Servers
Gaining Cisco Hewlett-Packard Dell	Losing Sun IBM

Storage
Gaining Network Appliance Hitachi Data Systems EMC Hewlett-Packard IBM	Losing Sun Dell

Software and Security
Gaining VMware RedHat Hewlett-Packard Salesforce.com Citrix Microsoft CommVault Cisco EMC	Losing CA TIBCO Quest Software BMC Software Check Point

I, too, believe that we'll see a recovery in 2010, but expect to see much more consolidation among big vendors. It will be interesting to see how many start-ups and medium-size companies avoid or opt against becoming part of an IT behemoth.

[kiteprice]

Really a educative and informative post, the post is good in all regards,I am glad to read this post.<br /><br />http://www.goarticles.com/cgi-bin/showa.cgi?C=2222539

[play7]

And where do they think people will get the money ?

[juan_trujillo]

This article is focused towards corporate IT spending, not end user spending. I guess that's were your confusin lies.

[BigGuns149]

Does it matter? Not really.<br /><br /> A lot of businesses have pushed off some of their 2009 spending into the future, but at some point hardware fails and if the operation of the machine is important to your business even if you are merely repairing the system as opposed to replacing it you are going to have to spend something on IT.

[play7]

"Survey: IT spending to recover in 2010" <br /> <br />Well that might be some what true but its the end users taht will cause this to occure. Without the end users indeed it will fail. Hence where are those "END Users" WHERE WILL they get the money. Still is a major factor. I think you forgoteen a step in the process. <br /> <br /> <br />"by BigGuns149 November 26, 2009 12:58 PM PST <br />Does it matter? Not really. <br /> <br />A lot of businesses have pushed off some of their 2009 spending into the future, but at some point hardware fails and if the operation of the machine is important to your business even if you are merely repairing the system as opposed to replacing it you are going to have to spend something on IT." <br /> <br /> <br />This makes more sence. And it will be pushed back year after years until they noticed there is no end to this.

[artistjoh]

@play 7<br />Your question is very puzzling. Just because money might be tight for some does not mean there is no money. Investing in my own company is something I do all the time. Most expenditures are budgeted for in advance so that I already have an existing fund for marketing, or computer replacement and so on but sometimes there are extraordinary expenses and if I am able to demonstrate that by spending x then I will get a return of x + y then I take the figures to my bank manager and he is normally only too happy to advance the money. That is a normal part of doing business.<br /><br />Your question possibly also reflects some local conditions that you are witnessing and you are not seeing the bigger picture. In my country the recession ended back in March and since then business in my sector has been flourishing while there are some other industries that are slower to recover but even in industries worst hit you will find that there are some companies struggling to keep their doors open but there will be others who will find it easy to spend money on IT and could have done so during the recession but took the business decision to hold off spending until the return on investment is higher which it always is during a recovery phase.

[play7]

"by artistjoh November 29, 2009 12:59 AM PST <br />@play 7 <br />Your question is very puzzling." <br /> <br /> <br />Well we can always assume like what your doing but the fats are companies will NOT update their systems if there s no possible way to recoop the cost. Simple Business 101 ideas here.

[cptnjarhead]

um.. can you say tax payers?<br />Just read the article.. "Goldman Sachs" and others do not worry about money.. the government is paying .. i mean we are paying the bills. The only reason wall street is staying above water is because of bailout money.<br />This money is a false positive. It will not last. These projected numbers are based on an economic structure that has no legs whatsoever.

[CTRoma]

This survey says 2 things to me about the increase in spending:<br />1) More money to infrastructure that was delayed in 2009 (HP - NetApp)<br />2) More money to SaaS and "free" software (Salesforce and NetApp)<br /><br />IT has to buy infrastructure to keep up with the business - a lot of money spent is just catching up. More importantly, they want flexible, "lower-cost" effective software....not your classic description of enterprise software. <br /><br />I wrote more about it here: http://www.sellinghasvalue.com/2009/11/26/sales-and-it-spending-rebound/

[play7]

But if they dont have the capital to draw from .......... Many IT business are having this problem.