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August 3, 2009

State of the Nation

In the first in a series of regular surveys, CBR questioned almost 300 people within the IT end user and supplier community, to uncover the key trends in IT in 2009.

By Jason Stamper

CBR, in association with ICD Research, has just conducted a survey of almost 300 people in the IT community. With 44 in-depth questions completed by the 294 respondents, the survey produced thousands of data points that can help both suppliers and end users better understand the key trends in IT in 2009.

The survey will be for sale in its entirety in the next few weeks from ICD Research for $2,000, but CBR subscribers can claim a 30% discount on that price by calling Aziz Rahman at CBR on +44 (0)207 915 9768 or mailing him at arahman@industryreview.com.

In the mean time, as media partner CBR has been given an exclusive sneak peak into some of the key findings. They may just surprise you.

Of the sample set, 41% were end users, with the rest made up of technology vendors (12.9%), outsourcing providers (7%) and consultants. There was a bias in the geography in which respondents operated: 78% were based in Europe, with 18% in North America, 17% in Asia, 14% in the Middle East and the rest ‘worldwide’.

There was also a certain bias towards some industry sectors. The biggest group  (29.55%) came from IT and technology, reflecting the fact that vendors and consultants were included in the survey as well as end users. The next largest group were in financial services (14%), followed by government/public sector (12.5%) and then professional services (5.7%). A complete breakdown, and the ability to split the responses out by sector or job function, is available with the full copy of the research (see phone number above).

As for job titles, 28.4% described themselves as managers, 15.7% head of department, 14.6% director/SVP/VP, 14% technical staff, 13% CEO/president/C-level executive and 9% head of business unit. 5% simply described themselves as ‘staff’.

Let’s take a look at some of the key findings. We asked whether respondents consider themselves ‘more or less optimistic about revenue growth over the next 12 months compared to the previous 12 months?’ What with the state of the economy, we weren’t expecting an awful lot of optimism in the middle of 2009. So we were rather surprised that just over 22% described themselves as ‘more optimistic’. A further 35% described themselves as ‘neutral’, while the majority, to be fair, said they were ‘less optimistic’ (37.6%).

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Recent news from analyst firm Gartner painted a gloomy picture for the IT sector. The researchers once again revised down its estimates for worldwide IT spending in 2009, which it now expects to slide by 6%.

In March of this year, Gartner had forecast 2009 worldwide IT spending would decline by no more than 3.8%. But now the market-watchers have said spending will be running at levels which should tally $3.2 trillion by year end, down on last year’s numbers of $3.4 trillion.

Continued weak IT spending because of the economic situation combined with the effect of exchange rate movements are to blame, according to the firm.

Let’s compare that to our own findings. In the following question, we asked, ‘How do you expect your organization’s IT spending to change over the next 12 months?’

23% said it will decrease by 5-10%, and 22% said it will be down by 1-5%. All told, 53.5% said they expect spending to decrease in the next 12 months. Just over 17% of respondents said they expect spending to remain at the same level.

As for those who are actually hoping to have higher IT budgets to ‘play with’, 10% said it will be up between 1- and 5%; 7.8% said it will rise by 5-10%; 1.7% by 10-25% and 2.6% said it would grow by more than 25%. That 2.6% really are in a rather privileged position, and anecdotal evidence from speaking to end users at CBR Dining Club events would suggest that only those firms that have just made a significant acquisition are seeing that kind of budget rise – they need a big IT investment to get the IT integration done.

“The full impact of the global recession on the IT services and telecommunications sectors is still emerging, and the rise in the value of the US dollar against most currencies in recent months will have a material downward impact,” said Gartner in its forecast for IT spending.

The next question that CBR has been given priority publishing rights over was, ‘When do you expect the global economy to recover?’ The biggest group (34%) are plumping for the first half of next year – earlier than some economists and think-tanks have predicted.

The Ernst & Young Item Club has said it doesn’t expect consumer spending – a driver for economic growth – to pick up again until 2011. The report, published late last year, also said it predicted another 500,000 people would lose their jobs before the recession comes to an end.

Meanwhile earlier this month, think-tank the National Institute of Economic and Social Research (NIESR) said the UK economy will not fully recover from the recession until 2014. It predicted that it will take another five years until income per head has returned to the level seen before the recession started in the second quarter of 2008. In a gloomy assessment of Britain’s economic prospects, it also warned the cost of servicing the country’s soaring national debt will almost double within four years.

The recovery will be weak, warned NIESR economist Simon Kirby. We see continued contraction in consumer spending and business investment [in 2010].

But in our sample, 29% said they expect the global economy to recover in H2 2010, 10% said Q4 2009, and 3.4% Q3 2009. 18.8% in our sample said they expected it to recover in ‘2011 or later.’

The last question (that we’re able to publish the results of at this time) was: ‘What are the biggest concerns for your organization in 2009-2010?’

Perhaps the results here are unsurprising – market uncertainty, and falling demand in core markets, together mean that ‘cost containment’ is the biggest concern for most of our respondents (50.4%).

Further down the list but still a big concern for 38% is ‘responding to pricing pressure’, while another 38% are concerned about ‘working to, or shaping, new business models’. Almost 33% are concerned about staff reductions or staff shortages, and regulatory change is a big concern for almost 20%.

Of the last few concerns, we were a little surprised that the ‘green’ angle, in this case ‘meeting environmental / climate change challenges’ was only a big concern for 12% of respondents.
 
A recent poll by Forrester found that those companies accelerating their green IT initiatives outnumber those slowing down their activities by a factor of two to one.

Among the 1,000 companies polled for the Forrester study, a majority were not expecting to make any changes to their plans. Some 10% of those surveyed are reportedly accelerating their green IT initiatives, with only 5% of sites slowing them down, the firm found.

This isn’t about saving the planet for most companies, remember, it’s about saving their bacon. Reducing energy costs and cutting the power consumption of the compute estate is the most important criteria for organisations looking to implement green IT initiatives. Click here for CBR’s recent feature on green IT.

To receive the full CBR-ICD Research survey with a 30% discount on the $2,000 list price, call Aziz Rahman at CBR on +44 (0)207 915 9768 or email arahman@industryreview.com.

Other questions included in the full research (44 questions in total) include:

* What is the one most important thing your company is doing to tackle these [major] concerns?
* What are the 3 most important ways that suppliers can help technology buyers’ business during the recession?
* Given the current business climate what do you see as the biggest opportunity in relation to technology and IT systems over the next 12 months?
* Which IT products and services do you expect to be spending more or less on over the next 12 months?
* How important are each of the following factors to your company when selecting a technology vendor for a major contract?

All results are also analysed by sector, region, total budget and split out into end users versus vendors/consultants in the full report.

To see the graphs accompanying this story, please see digital edition of this month’s magazine.

Carousel image credit: net_efekt, Flickr, CC licence.

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