Transcript The IT Spending Recovery : How Soon and How Fast?

Stephen Minton
Director, Worldwide IT Markets
International Data Corporation
2004 and Beyond : Vision
for the Worldwide IT Market
www.idc.com
The High Tech Climate
Dot-com crash
Global recession
Telecom winter
September 11
Since Then …
Enron, WorldCom, etc.
Wall Street
War in Iraq
Oil Prices
SARS
… An Industry Cratered
WW IT Spending Growth (%)
10.8%
11.5%
-4%
-0.5%
1999
2000
2001
2002
Corporate Profits On The Up….
15
10
5
0
1999
2000
2001
2002
2003
-5
2004
2001 was biggest fall in
US corporate profits
since Great Depression
-10
Pre-tax US profits
Source : Consensus Economics
30%
20%
Strong correlation
between profits
and IT spending
10%
0%
-10%
1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000
-20%
IT
-30%
Source : US Department of Commerce
Profits
United States IT Spending Growth
12
10
8
6
4
IT Spending
Upside
Downside
2
0
-2
1998 1999 2000 2001 2002 2003 2004 2005
-4
-6
-8
Source : IDC Black Book October 2003
Regional IT Spending Growth
% Growth
18
13
Europe
8
Japan
3
Asia
Pacific
Latin
America
-2
2000 2001 2002 2003 2004 2005 2006 2007
-7
-12
Source : IDC Black Book Preliminary June 2003
Worldwide IT Spending Growth
% Growth
15
13
11
9
7
5
3
1
-1
-3
-5
Slightly outpacing nominal GDP
growth by 2005 and onwards
IT
Spending
2000 2001 2002 2003 2004 2005 2006 2007
The bottom was last year
Source : IDC Black Book October 2003
Worldwide IT Spending, 1989-2007 ($m)
1,200,000
1,000,000
800,000
600,000
400,000
200,000
Hardware
Software
Services
20
07
20
05
20
03
20
01
19
99
19
97
19
95
19
93
19
91
19
89
0
Key Trends
 Hardware: vendor consolidation, price
competition, commoditization, optimization
 Software: age of complexity, growth via
modules and software that simplifies,
standardization, price competition in
applications, innovation the key to growth
 Services: smaller projects, enterprise
application-related activity slowing as software
slows, outsourcing growth
Biggest Challenge Facing IT Department
'Good-enough
computing' mood
15%
Company's shortterm outlook
21%
Skills shortage
12%
Shortage of
quality products
6%
High cost of IT
11%
IDC US End-User Survey Q3 2003
Weak economy /
profits
35%
IT Department Top Issues
Front/back-office
integration
8%
Infrastructure
29%
Web projects
11%
Reducing costs
of IT
29%
New software
app solutions
23%
IDC US IT Department Survey Q3 2003
Infrastructure upgrades,
replacements and cost
reductions are top focus
areas; growing focus on
new software apps
“What keeps you awake at nights?”
Ageing infrastructure
Projects behind schedule
After job insecurity,
projects and budget
cuts, IT departments
worry most about
infrastructure
Unreliable technology
Threat of more budget cuts
Job insecurity
High costs of IT
Vendor instability
Security
Insufficient funds
%
0
10
20
30
40
IDC US IT Department Survey Q3 2003
Areas Suffering From Critical UnderFunding Due To Spending Cutbacks
Security
Servers
Printers
System Infrastructure SW
Storage
Network
% respondents, n=557
PCs
0
5
IDC US End-User Survey July 2003
10
15
20
25
30
System Infrastructure Software Spending
Growth (North America)
18.00%
Serverware
16.00%
14.00%
Storage
12.00%
System
Management
Networking
10.00%
8.00%
6.00%
Security
4.00%
Network
Management
Operating System
2.00%
0.00%
2004
2005
2006
2007
Source : IDC Software Market Forecaster, September 2003
Major priority areas in next 12 months
Instant messaging
Web Services
Linux
ERP
Video conferencing
Wireless networking
Security
Business intelligence
Sales force automation
Mobile computing
E-commerce
CRM
0
10
IDC US End-User Survey Q3 2003
20
30
% respondents
40
Reasons to Increase IT Spending…..
Infrastructure problems
New product innovation
Customer demand
Competitive pressure
Falling costs
Technology
improvements
Improving economy
0
10
20
30
40
50
% respondents
IDC US End-User Survey Q3 2003
60
The Big Picture
Complexity – Driver
and Inhibitor
Infrastructure : Pent-Up
Demand, Commoditization,
Simplification
Security Is Everywhere
Conclusions
IT Spending Growth will continue
to recover with overall economy
and business investment, but
muted in comparison to pre-2001
Focus on key market
opportunities, including Security
and Serverware software
The CEOs are still nervous –
must play to cost-conscious
market with appropriate
message
Questions?
Please email me at
[email protected]