IT spending set to bounce back

Link: Accounting scandals hamper IT spending

Speaking at its European IT Forum in Monaco, IDC’s chief research officer John Gantz, said: ‘The rebound of the IT market is coming.’

Despite the tough current market conditions, the analyst said the bottom has been left behind, and there will be a modest upturn in growth over the rest of 2002.

Next year would see ‘a return to normal growth patterns, but not aggressive growth,’ he said. IDC’s worst-case scenario predicts at least 4% growth in European IT spending in 2003.

Gantz said the slowdown in IT spending was part of the industry’s usual business cycle, where new technology creates ‘a new paradigm’, creating a speculative bubble – followed by a slump in the market.

But he said following the slowdown, long-term exploitation of new technology begins ‘with lots of technology and business innovations and changing market share.’

Gantz the new market will see architectural changes in everything from servers and storage to telecom infrastructures, IT services, software and ebusiness. He warned vendors that they must stay close to customers and that ‘the first to gain mind share in the new era gains market share’.

IDC said technology users should form partnerships with systems integrators, and cut costs by outsourcing all but non-strategic areas of IT. Outsourcing models would evolve to focus on managed services and utility computing models.

The internet, business integration, mobile, security and globalisation will be driving forces of the rebound: ‘Mobile and wireless is set to be the driving force on the computing landscape for the next decade,’ said Gantz.

Wireless local area networking equipment sales will grow by 22% a year until 2006, IDC said.

There will be 20m European broadband home users by the end of next year, IDC said, and ‘transaction-intense’ web sites will grow five-fold in four years to ten million by 2006.

But Gantz warned that investments in security are being outpaced by value of transactions they are protecting. No longer a ‘minor tactical function’ security had to become a ‘major strategic investment’. He said while there had been a 1000% growth worldwide since 1999, security spending had yet to double on 1999 levels and needed to enjoy a higher profile.

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