Goldman Sachs' latest IT spending survey is out and it looks a tech-spending recovery is on the way for 2010. To a large extent, the data suggests not so much that spending is dramatically higher, but that it has normalized at pre-recessionary growth rates, rather than contracting as it has over the past several months.
Goldman is cautiously optimistic about 2010 spending, noting that much of it depends on the macro-economic environment driving more business spending. And while most areas will see growth counter to 2009's downward spiral, some areas such as off-shore development will feel significant retraction.
Regardless, the sentiments are positive and dramatically different than Goldman's report from November 2008 where IT spending was in a total death spiral. What a difference a year makes.
A few key points from the report:
- With recessionary buying cycle clearly through the trough, the remaining question centers on the pace of recovery for 2010.
- Infrastructure, application development, and systems integration remain top spending areas, especially as CIOs start to consider newer technologies such as virtualization and cloud computing.
- There is pent-up demand in hardware most notable, positive for storage and server/PC refresh.
- The appetite for offshore services appears to be below trend at current levels.
- HP, NetApp, CommVault, Red Hat, Riverbed, and Salesforce.com are notable names showing positive upward momentum in our latest survey.
In software, Red Hat and Salesforce.com showed strengthened results with VMware and Citrix remaining top of mind, which Goldman believes to be a good indication of internal and external cloud deployments gaining momentum.
On the desktop Microsoft's Windows 7 is resonating well with CIOs as 94 percent of survey respondents intend to upgrade to Windows 7, underscoring Goldman's thesis that "pent-up demand and a hardware refresh should fuel a robust Windows 7 product cycle." According to the survey:
32 percent expect to upgrade in 2010 (9 percent in 1H, 23 percent in 2H), while another 28 percent anticipate an upgrade in 2011. With the majority of the installed base (around 85 percent to 90 percent) still on Windows XP, and XP support expiring in April 2014, we believe that 2013 becomes a de facto deadline for upgrades.
In regards to professional services, survey results reflect a material uptick in respondents indicating increased budgets for discretionary spending in the next six months, which is consistent with Goldman's view that discretionary IT spending will likely trend upward into 2010 on the back of an improved macro and corporate profit backdrop.
Another interesting area of the survey is which vendors are gaining share of reduced budgets.
|PC and Laptop Gaining|
|Software and Security|
I, too, believe that we'll see a recovery in 2010, but expect to see much more consolidation among big vendors. It will be interesting to see how many start-ups and medium-size companies avoid or opt against becoming part of an IT behemoth.