As you replace servers, it’s time to think strategically

I recently spoke at Enterprise IT Week at cdXpo in Las Vegas about the future of server computing in 2004. In this and upcoming newsletters, I’ll be exploring some of the points in that speech.

IT people are starting to buy again. Money is still tight, and that’s not going to change quickly. Growth won’t ever return to dot-com heights. That’s the bad news.

The good news is that server spending is up. After 10 quarters of downward growth, the market will recover to $18.2 billion this year. That’s about 3% higher than in 2002. In 2004, IT spending worldwide is set to grow 5% to $916 billion. Server revenue will grow by an additional 6.1%, research firm IDC says.

It’s also good news that you’ll be able to make investments in things that solve real problems. In buying servers and processing power, there are a number of ways to do that.

One significant driver of overall market growth will come as companies replace their aging server platforms and consolidate resources onto newer, more powerful and efficient systems. A recent study from IDC shows that 60% of customers replace their servers after three years and 35% refresh their servers every five years.

Historically, IT has bought more tactically than strategically. Because of economics and slowing company revenue, IT must find ways to be more strategic to the companies they work for.

In the past IT was concerned with issues such as bandwidth, CPUs, memory and so forth, and didn’t think a lot about how they affected the needs of the business, says Jamie Gruener, senior analyst for the Yankee Group.

“As IT plays a more strategic role, IT folks must learn to express how what they do affects productivity, revenues and costs,” Gruener says. “That may require a different type of architecture or way of thinking.”