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Local Tech Wire

ORLANDO, Fla. – Research group Gartner Inc. says the information technology industry is closing its worst year on record, with worldwide tech spending on track to decline 5.2 percent in 2009.

But the tech industry is expected to return to growth next year. Gartner is forecasting a 3.3 percent year-over-year increase in 2010, to $3.3 trillion.

Even as a recovery begins, however, that 2008 levels of spending won’t be seen again for some time.

“While the IT industry will return to growth in 2010, the market will not recover to 2008 revenue levels before 2012,” said Peter Sondergaard, senior vice president at Gartner and global head of research. “2010 is about balancing the focus on cost, risk, and growth. For more than 50 percent of CIOs the IT budget will be 0 percent or less in growth terms. It will only slowly improve in 2011.”

Gartner is forecasting that worldwide technology spending in 2009 by large corporations – called enterprise spending – will show a drop of 6.9 percent.

By segment, Gartner forecast:

• Computing hardware spending will drop 16.5 percent this year to $317 billion. Spending will be flat in 20010.
• Telecom spending will decline 4 percent this year to $1.9 trillion then grow 3.2 percent next year.
• IT services spending will be $781 billion this year and grow 4.5 percent next year.
• Software spending will drop 2.1 percent this year but grow 4.8 percent in 2010.

In planning for 2010, Sondergaard stressed three areas of top important for CIOs:

1. A Shift from Capital Expenditure to Operational Expenditure in the IT Budget — Concepts such as cloud services will accelerate this shift. IT costs become scalable and elastic. CIOs need to model the economic impact of IT on the overall financial performance of an organization. For public companies, they must show how IT improves earnings per share (EPS).

2. Impact of the Increased Age of IT Hardware — “With delayed purchases of servers, PCs and printers likely to continue into 2010, organizations must start to assess the impact of increased equipment failure rates, and if current financial write-off periods are still appropriate. Approximately 1 million servers have had their replacement delayed by a year. That is 3 percent of the global installed base. In 2010, it will be at least 2 million. “If replacement cycles do not change, almost 10 percent of the server installed base will be beyond scheduled replacement be 2011,” Sondergaard said. “That will impact enterprise risk. CFOs need to understand this dynamic, and it’s the responsibility of the CIO to convey this in a way the CFO understands.”

3. IT Must Learn to Build Compelling Business Cases — 2010 marks the year in which IT needs to demonstrate true line of sight to business objectives for every investment decision. IT leaders can no longer look at IT as a percentage of revenue. CIOs must benchmark IT according to business impact.

The top three topics for IT in 2010 will be, according to Sondergaard:

• Business intelligence
• Virtualization
• Social media

The AP contributed to this report.