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We are planning a flat budget for 2010. That does not mean we won't grow or implement new projects, it just means we are not going to spend any more than last year.
Posted By:pkrbkr| Mon Aug 17, 2009 11:06
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Ralph Finos consulting placed this on the Wikibon blog in July. He'll be updating his forecast this week when HP and NetApp report:
Overview – Ralph Finos Consulting estimates that 1H2009 WW IT Spending was -11.4%. Assuming that the July exchange rates are sustained throughout the 2H of 2009, the as-reported 2009 forecast is for a -6.8% decline for 2009 and a modest +3.9% recovery for 2010. We appear to have found the bottom. The revenues of 19 of 35 (54%) of IT vendor business units were short of the forecast estimates and/or the midpoint of vendor guidance (vs. 72% falling short in Q109. Currency has been an important factor (around a -7% impact – depending on the product) for Q1 and most of Q2). However, the comparative strength of the dollar in Q3 & Q42008 will be advantageous for vendors in Q3 & Q42009. As-reported YoY results should have much less of a currency drag than the 1st half and may be a Q4 kicker.
Posted By:Wikibon Daemon| Tue Aug 18, 2009 10:08
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Budgets not only remain flat, but even expense budgets are being asked to be reduced. This means that even though equipment may not be refreshed at the normal cycle, we are asking our vendors to reduce what they charge for maintenance.
We are looking at methods to consolidate, where we can take aging assets and remove them from service while still providing the appropriate service levels to our customers. For instance, two large arrays where one is >4 years old and the other is turning 3. Consolidate the older one into it's younger brother while still providing the same level of performance without penalty. This is not a small undertaking, but it's being examined in order to reduce the yearly maintenance expense.
Also Prof Svcs budgets are being slashed if even allowed so the work either has to be funded by our vendor (they get the benefit or staying our vendor) or internally with the limited tools and expertise on hand.
Money is very tight, and even though we still need to acquire storage assets, we continue to look to ways to do it without risking much of the corporate liquid assets. Vendors must understand that they have to expose themselves more through this period which I hope will resonate to mgmt that they've been the partner we expected them to be and we'll remain with them after this tightening passes.
Posted By:blackmjr| Tue Aug 18, 2009 11:22
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Is this continued severe budget pressure causing changes in strategy -- for instance moving from keeping resources internal to looking to the Cloud, for instance to Software-as-a-Service and Storage-as-a-Service?
Posted By:Bert Latamore| Tue Aug 18, 2009 12:32
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If my interactions are any indication, we'll see flat spending with continued line-item scrutiny. The money will continue to shift around. Seat-based spending will continue to come under pressure as corporate headcounts continue to contract, albeit at a slower pace. On the other hand, spending on SaaS and managed services will continue to tick up, as budgets continue to transition from the capital line to the operating line. I think SaaS vendors with a growing set of functionality will do well, as will infrastructure services guys like Equinix and Dupont Fabroes.
Posted By:Mark G| Tue Aug 18, 2009 01:10
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Some feedback from other practitioners
• Current trends in IT spending, information and optimization will continue into at least the Q12010.
• Large and midsize firms are looking to still squeeze out efficiencies from the consolidation of database instances and licensing (e.g., corporate, development, and e-business applications), virtualizing the datacenter, standardizing on open source operating systems (LNX) and content platform interfaces, sun setting legacy HP UX and Sun Solaris platforms, optimizing information management platforms such as email, content management, archive and storage across LOBs and M&A, and running CRM and the supporting sales and marketing applications as cloud services.
• Information security continues to be cited by many as one area ripe for investment dollars.
• And 2009 thresholds will stay in place in the early part of 2010, with fewer discretionary spend opportunities
Posted By:Michael Versace| Tue Aug 18, 2009 04:40
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Is anyone seeing any change in so-called hurdle rates - i.e. the % return CFOs are requiring for IT projects?
Posted By:David Vellante| Tue Aug 18, 2009 10:11
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Everything is being asked one main question -- if we don't do this, what can't happen? If a project isn't critical, it doesn't get funded.
We implemented a Storage Service model, which has allowed us to gain the favor of Sr Mgmt. This doesn't mean we get what we want, it means that it's easier for us to explain the gaps, benefits, and how we will be able to recoup our costs, so the impact to our budget is lessened, therefore giving IT Finance a clearer picture on the return of our spend.
In reading the other comments, they sound like people trying to justify x or y in order to justify their postion, but really don't know the full story. I hope you get more feedback from those managing the budgets and not from the pundits.
Posted By:blackmjr| Wed Aug 19, 2009 09:03
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In Europe the economy differs from country to country. It seems that German economy started to recover despite that the country is heavy depending on export. The new democratic countries (the previous east block) is in a pretty bad situation. The only country showing some stability is Poland, in the rest of the countries the BIP will decrease. The situation is in particular critical in the Baltic countries and Hungary. In Israel, many start-ups reduce their manpower which will have impact on future innovations. The SNW in October will give good indication on future spending.
Posted By:Josh Krischer| Fri Aug 21, 2009 10:19
