Gartner (NYSE:IT) is hosting their Symposium/ITxpo 2008 conference in Orlando this week. From Peter Sondergaard, Gartner's global head of research, comes the money quote:
The next big thing in IT is not a technology — it is cost reduction, risk management and compliance.
Garter goes on to say that information technology spending could rise only 2.3 percent in 2009. Gartner had previously forecast 5.8 percent growth in IT spending next year. Developed economies are expected to get the worst of it, especially the United States and Western Europe, but emerging regions will not be immune either.
For Europe, Gartner is now predicting a slowdown of 0.8% where it was previously looking for 2.3% growth. In North America, they are expecting growth to remain barely positive at a 0.5% rate, down from the previous prediction for 5.3% growth.
Echoing some of the themes we previously wrote about in our post "10 ways the financial meltdown impacts tech", Gartner offers several recommendations to help IT managers reduce costs:
- Virtualize servers, a trend that is expected to benefit companies like VMWare (NYSE:VMW)
- Adopt software-as-a-service (SaaS) to reduce the cost of developing in-house systems or the upfront cost of licensing and installing systems.
With top tech CEOs like Steve Ballmer of Microsoft, John Chambers of Cisco Systems and Michael Dell addressing attendees, we can probably expect to hear more from the conference.
And then there is Sun --
Whereas Gartner paints a picture of pervading gloom and IT departments hunkering down, there is no shortage of other opinions.
Sun Microsystems (JAVA) CEO Jonathan Schwartz was recently interviewed by IT publication Computerworld and his take is different.
He feels that the economic downturn will encourage businesses and IT departments to be more open to change. To Schwartz, that means more interest in Sun's open source solutions, for example. This would include products like MySQL, the recently acquired database engine and OpenSolaris, Sun's operating system. Open source is also one of the themes in the post we mentioned above.
Schwartz, however, registers a bit more optimism about the willingness of IT departments to engage in rolling out new technology. Yes, open source may yield cost reduction but often, to an IT manager, doing nothing new and staying with existing technology choices is often cheaper. Especially if the migration to open source involves retiring an established technology in order to implement something new. Since there are always significant labor and training costs involved in any technology migration, it seems the optimism is a bit overdone in a time of "hunkering down".
Likewise, Schwartz touts Sun's energy efficient server solutions as having the ability to greatly reduce data center costs. I find it highly unlikely that anyone, at this time of shrinking budgets, would retire existing servers to bring on line a new set of servers.
So the consensus seems to be that IT is heading for tough times and IT departments will certainly be forced to react to the situation. Gartner expects staff reductions and serious cost cutting as a result of significantly slowing growth.
Sun expects business to commit to purchasing money-saving solutions. As systems reach end-of-life or brand new capabilities are required, there may be the potential that companies will switch into Sun solutions. On the other hand, when under cost pressure, managers tend to be most conservative. I believe this situation plays against Sun's ambitions and the company will face challenges like most other enterprise suppliers.