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An IDC Market Analysis and Forecast for 2009-2013 has been released and the results demonstrate a modest increase in IT spend by SMB?s worldwide ? gross IT spend is predicted to rise by a mere 5.6% per annum and after inflation is taken into account, this is almost a static number. For enterprise class customers, the situation is even worse with financial spending contracting by 3.1% pa and in real-terms, this does represent inflationary contraction.
The recession has certainly taken its toll as companies seek to cut costs but the scope for further IT development is constrained even more than this budgetary forecast demonstrates. The vast majority of typical IT budget is spent on maintaining infrastructure and financing the operating cost ? typically in the range of 80% of the total IT budget.
This leaves a mere 20% of the total IT spend to buy new equipment, but even this number is not available for ?projects? and new initiatives. Included in this slice of total IT budgets is the requirement to buy replacement equipment for that which has failed and cannot be repaired or if it can be repaired, failure requires a new swap-out simply because of the high reliance levels required.
This constraint on IT managers and budget decision makers makes it imperative that they focus on the core issues confronting the networks they manage and also, ensure that capital investment projects deliver very real benefits in financial terms to the organization.
Common core issues focus on the traditional chestnuts:
Security ? data theft is increasingly of concern not only because of the loss of proprietary data but also, the compliance issues which are increasingly ensnaring businesses as regulation mindsets of government agencies kick-in after the recessionary fall-out. The banking and financial sector is particularly hard hit and sensitive In this regard;
Sarbanes-Oxley ? since the introduction of SOX, the need to ensure data can be recovered has taken on far greater significance to companies across all industry sectors. SOX has had a far-reaching impact in terms of the industry sectors it has ensnared but also where companies are doing business. Legislators probably had little inkling that their work would mean billions of dollars of cost for overseas companies doing business with US consumers, and this has helped continue the growth in storage and data retrieval solutions backed by DR fail-safes.
Outsourcing ? increasing complexity of all solutions, both hardware infrastructure and software, combined with short-staffing of IT departments has led to increased demand for the services of VAR?s (Value Added Resellers) but tight control must be exercised.
Overall, it is the partnerships which are forged with VAR?s , especially those that can deliver solutions subject to the tightening budgets of IT managers, which is the greatest hurdle facing both the industry and companies today. VAR?s must be imaginative and specific in delivering solutions for clients and prospects. Solutions must demonstrate significant positive financial benefits with decreased payback periods if they are to stand any realistic chance of being considered by IT managers. IT managers must also continue to chip away at the large operating element of the IT budget if they are to release chunks of the total IT allocation to keep their networks abreast of developments, particularly risk exposure and performance expectations.
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