IT Projects Delayed, Not Canceled

Companies will eventually buy IT, though they're still hesitant at the moment.

IT Spending
Firms like Intel (NASDAQ: INTC) have already made it clear that consumer spending has held up far better than corporate spending in this financial crisis. Companies have been delaying the regular refreshment of their equipment, but now there's some good news: They aren't canceling things outright.

That's the conclusion of a new report from Gartner, released ahead of the IT research firm's annual Hardware Insight show next week in Redwood City, Calif., where it will lay out projections for the hardware sector in the coming year. ( will have coverage.)

In a survey of 475 IT firms with 1,000 or more employees, conducted in February and March, Gartner found only 12 percent indicated they have outright canceled a planned client project since October 2008.

That would mean canceling upgrades or new hardware deployments, as the survey was focused only on the client side.

Despite the numerous reports of IT budget cuts and postponed sales -- not to mention the frequent description of exhortations from Intel, Microsoft and other vendors for customers to avoid delaying their purchases -- the situation actually is not that bad.

In its survey, Gartner found 48 percent said they are going ahead with deployments as planned -- economy be damned -- while another 33 percent said they were deploying as planned but at a lower scope, scaling back somewhat. Only 12 percent were canceling projects outright, and 29 percent said they were postponing deployments.

That's more than 100 percent, because the survey was multiple-choice, explained Andrew Johnson, managing vice president with Gartner. As a result, some firms may have answered twice to indicate they canceled some projects while going forward with others.

"The message out of this survey we took to heart is that it would be very easy to cancel a lot of projects around PCs and stretch projects out, but people aren't," he told "Half of them are proceeding as planned and the majority will postpone or delay but not cancel their deployments."

Respondents were from nine countries: Australia, Brazil, China, France, Germany, India, Russia, the United Kingdom and the United States.

Gartner forecasts that overall IT spending to decline 3.7 percent in 2009 but recover to 2.4 percent growth next year. Spending on IT hardware will drop by 14.9 percent in 2008, recovering to a minuscule 0.8 percent growth in 2010.

The survey also reflects the different economic conditions around the world. For example, 85 percent of Chinese respondents and 64 percent of Indian respondents said they would deploy projects as planned in 2009, but only 29 percent of U.S. and 18 percent of French companies planned to continue their client computing projects as originally planned.

The delays are because in most cases, there's no canceling the inevitable: these computers will fail.

"There's an inevitability of replacing PCs," said Johnson. "There are hardware reliability issues, so it's not a decision that can be eliminated, but it can be delayed."

Something that might kick up sales, assuming the economy recovers: Windows 7. While not covered in this survey, Johnson said based on client inquiries, there is tremendous interest in Microsoft's new operating system, due later this year.

"Windows 7 is a driver for next year," Johnson said. "Depending on the country and region, it could be big mid-next year to late next year." IT shops, while delaying Windows purchases until Windows 7 ships so they don't get saddled with Vista, are still going to take it slow, he said.

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Tags: Windows, Microsoft, consumer, Vista, Intel

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