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Outlook 2010

Cautious optimism shapes new year

What 2009 changed, and what we can expect next

By , Network World
January 04, 2010 12:02 AM ET
Outlook 2010

Network World - It's a new year and things are looking brighter, but there's no going back. Fundamentals have shifted.

Related story: Does it have to be shiny and new?

The recession has changed IT priorities, shortened the yardstick used to measure investment success and even shaped the outlook for certain technologies. Software-as-a-service and other cloud options, for example, are suddenly more alluring.

"The downturn has forced companies to focus even more strongly on how they deploy their assets, how they make investments, and whether or not it makes sense to put a lot of capital into their own IT plants, their own data centers," says Nicholas Carr, the author and IT industry analyst who has been evangelizing utility-like IT services for years.

But while IT teams are mulling potentially dramatic changes to their core infrastructure, it's unlikely they'll have generous budgets to execute those changes. Resources remain tight, and there are few signs that things will bounce back to the old normal any time soon.

"We're definitely more optimistic, though we're still in the mode of doing more with less," says John Turner, director of networks and systems at Brandeis University in Waltham, Mass. "Expectations are higher. Folks see the economy recovering, and access to capital funds is a little easier this year, but the team is still small."

Don't expect extra hands

The tech industry had been growing nicely in 2008, right up until the financial meltdown kicked off a panic that caused enterprises to curb investments and start hoarding cash. Still, buyers drove more than 4% growth in U.S. IT purchases in 2008, according to Forrester Research. Last year purchasing shrank 9%.

"One of the key phenomena of this particular downturn was the degree to which it was concentrated in capital investment," says Andrew Bartels, a vice president and principal analyst at Forrester. "The financial crisis pushed companies into a panic state in terms of their ability to borrow and consequently caused them to do everything they could to conserve cash."

Now tech spending is looking up. A tad. Gartner is predicting IT spending in the United States will grow 2.8% in 2010 to reach $958 billion.

Forrester is more bullish. The firm is forecasting 7.7% growth in 2010, citing economic data from the U.S. Department of Commerce, expectations for gross domestic product (GDP) growth, and signs of a return to more normal lending conditions.

"That growth will still not bring us back to 2008 levels, but we're on a path of recovery that will get stronger in 2011 and beyond," Bartels says.

Dave Rudzinsky is among those planning to spend more this year. CIO of Hologic, a $1.6 billion medical device maker in Bedford, Mass., Rudzinsky fought to keep IT initiatives on track in 2009, despite pressure to cut back.

"We didn't shelve our projects because of the economy," Rudzinsky says. "We knew we had to get through them, so that on the other side of this we've enabled the business for the next wave of growth. We're spending for what we consider to be enabling technologies and platforms for the future, so we can support other areas of the business that are facing budget restrictions and trying to do more with less."

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