Economy stumps Gartner forecast
Analyst firm Gartner has found itself short of an explanation to IT managers about what to expect from the financial crisis and impending economic downturn.
Gartner head of research, Peter Sondergaard
(Credit: Gartner)
While today at its annual Symposium ITExpo in Sydney Gartner predicted that IT budgets across the globe would increase — albeit by as little as 1.1 per cent for Europe and 8.3 for Asia Pacific in 2009 — sudden changes in sentiment in recent months have buckled the stability of its forecasts.
Head of research Peter Sondergaard today said Gartner had to revise its global IT budget forecast figures, which are based on estimates given by over 400 chief information officers, due in early 2009.
Two weeks after the collapse of US investment firm Lehman Brothers hundreds of chief information officers that Gartner had surveyed expected IT budgets to grow at 3.3 per cent in 2009. Two weeks ago, however, CIOs gave much lower expectations, resulting in Gartner revising its forecast down to 2.3 per cent growth.
"So it's clear that whatever this is, it's a stake in the ground. We call it the best case scenario. Our worst case scenario is that IT budgets may end up declining globally, but would likely not go anywhere beyond the negative 2.5 per cent," Sondergaard said.
To cater for greater unpredictability Gartner has widened its possible IT budget growth scenarios from a variance of one per cent to more than three per cent. "IT market growth drops from 8.9 to 7.3 per cent in 2008 and from 5.8 to 2.3 per cent in 2009," it reported in its October figures.
The outlook for the Asia-Pacific region, while not as dire as that of Europe or USA, was high at 8.3 per cent, however it remained unclear where Australia fitted into the picture.
"You will still see growth in Australia, and in all market places, but not as aggressive as the rest of Asia," said Sondergaard.
And while Gartner is certain that IT budgets will slow, the question Sondergaard dared not answer is for how long they will head south.
"Your guess is as good as anybody else's," he told journalists. "The only thing we know is that recessions since the second World War have lasted no longer than three quarters, but that doesn't mean this one won't last longer," he said.
The good news for IT departments in the coming year, according to Sondergaard, is that technology budgets generally lag the broader economy by around six months or two reporting quarters.
The other element protecting technology spending is its stickiness — IT runs the business and therefore cannot be switched off, while spending on software maintenance, for example, is reviewed annually.
"So you can't just cut budgets even if you need to move budgets elsewhere immediately," he said. "I mean, you can violate a contract, but generally companies adhere to the cycle of renewal which would be annual or may in fact be multi-year contracts. So the impact is slower on software maintenance, service contracts, and people, with varying degrees around the world, which aren't as easy to cut back," he said.