Even as Forrester Research predicts a 3 percent drop in global information technology revenues, as reported by The Register, investment bank Goldman Sachs is piling on the woe it promulgated in an earlier report that with a new report entitled "IT Spending Survey: Mapping 2009."
As detailed in the report, incumbent vendors are about to see their sacrosanct maintenance revenue streams get pillaged:
Accounting for more than 50 percent of revenues at vendors such as Oracle, this is going to be painful, indeed, though the report also calls out that some of the bigger brand names are likely to weather the downturn better than most.
Even so, my company, and others that I advise, are seeing a flight from expensive maintenance contracts to open-source alternatives. At least half of my pipeline is filled with existing customers looking to dump their maintenance contracts with incumbent vendors.
Why? Because a solid open-source product can easily cost 10 percent of a proprietary vendor's maintenance contract, while delivering equivalent or better functionality. While any change will likely necessitate some third-party consulting--the No. 1 target for the budget ax in 2009--the cost advantages of doing this can still be substantial.
That said, any benefits from new projects must be near-immediate:
Open source is advantageous here, too, because enterprises can experiment with the open-source project long before deciding to buy it (if they buy it at all, rather than simply using a free version). This shortens the post-sale honeymoon, allowing enterprises get into production much faster. I'm aware of one large Web property that went start to finish on a Drupal-based Web site in one month. That is powerful.
Of course, one thing on which open source does not have a lock is collaboration technology, which Goldman expects to be a bright spot in 2009 IT spending, as enterprises seek to do more online rather than on the plane. Who gets most of those dollars? Microsoft, and nearly all of it in the form of SharePoint licenses:
CIO spending plans for Microsoft SharePoint fell from 75 percent in 2008 to 53 percent in 2009, but it's still a hefty chunk. Microsoft's share of collaboration IT spending isn't alone in falling: every vendor on the survey besides Cisco Systems went down since 2008. Still, at least the CIOs continue to plan for collaboration spending.
The same is true of cloud computing. It remains a bright spot for technology spending, with big vendors like Cisco (29 percent), IBM (28 percent), Microsoft (24 percent), and Google (17 percent) getting the biggest percentage of CIO votes.
It's not a pretty economy, but it's the one we have. Open source should fare well, but so will a select group of the larger, proprietary vendors that can deliver integrated solution offerings, particularly in the areas of collaboration and cloud computing.