Wednesday, May 22, 2024

IT Recession, Depression — Let’s Call the Whole Thing Off

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For 18 months, analysts and economists have debated the severity of the ongoing tech slump (recession, depression, let’s call the whole thing off).

But whatever it’s called, software developers and equipment sellers have heard the same maddening refrain from Corporate America: “We like your
product, we see how it could help us, but we’re not buying anything right now.”

Now, new data indicates that that sentiment is changing. Spending on IT products and services is stabilizing, and in some sectors, improving, according to Forrester Research .

North American firms will spend 2.3 percent more on IT in 2002 than 2001, and 82 percent of these will at least keep budgets level over the second half of the year, the Cambridge, Mass., market researcher found.

In addition, some top-level managers are ready to loosen the purse strings. Of the 1,001 decision makers surveyed, 55 percent said they were willing to “spend what
it takes” on IT, compared to only 36 feeling that way at the beginning of the year.

In Forrester’s January poll, company leaders had shifted their IT strategies toward infrastructure and do-it-yourself development and integration work.
For IT sellers, the confidence bump is encouraging, however, it by no means represents a return to the blank check days of the late 1990s.

“Executive commitment to IT is returning, and interest in categories like IT consulting and storage are showing more life,” said Tom Pohlmann, a Forrester senior
analyst. “But vendors must know where to look.”

In the services market, specialized, smaller-scale offerings will be most coveted, while software will be carried by portals and business intelligence applications.

A separate survey from IDC, pegs e-business as a growth area. While worldwide IT spending was flat in 2001, and declined in
the United States, e-business spending grew more than 20 percent, the Framingham, Mass., market researcher said.

Some examples of e-business spending include: bolstering commerce engines; automating their supply chains; and integrating with customer service

“The dot-com crash didn’t kill anything except hundreds of ill-conceived companies,” said John Gantz, IDC’s chief researcher. “It actually helped usher in the real
‘new economy’,” the one where businesses, schools, and government agencies from around the world are steadily integrating Internet technologies into their normal
business operations.”

Another area of strong growth should be security, as companies invest to keep their networks running and virus-free and sensitive business and customer data protected, IDC said.

On Wall Street, which has been battered by crooked accounting, some technology bellwethers are inching up. Cisco Systems
gained after reporting fourth quarter results that beat analysts’ expectations. The San Jose, Calif., networking giant also said it
expects first quarter sales to be flat or up slightly.

Late last month, the U.S. Department of Commerce reported that corporate America’s
spending on IT equipment and services were making their first gains, modest though they were, since late 2000.

Taken together, these indicators at least offer some hope to IT firms that the next time they wrap up a PowerPoint presentation, the potential customer says: “We
like your product, we see how it could help us, let’s make a deal.”

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