IDC: Soaring loonie will help network gear buyers

The high Canadian dollar is depressing many groups of businessmen in the country, but according to IDC Canada, it has one advantage: It’s making the purchase of IT infrastructure more affordable by giving organizations greater purchasing power.

That’s one of the conclusions in a recent study of Canadian network equipment buying behaviour, which notes that spending on this category of hardware and software will grow at a “torrid” 9.2 per cent compound annual growth rate over the next four years.

By comparison overall IT corporate spending will grow at a 4.2 per cent compound rate over the same period.

According to report co-author Jason Bremner, the survey shows IT buyers here believe there’s a connection between improving networking equipment and improving productivity, long a concern of business leaders.

When managers of medium and large organizations were asked earlier this year what problem will take priority in the upcoming quarter, 28 per cent chose improving productivity. Of those who believe LAN/networking spending will be their biggest IT spend, 59 per cent of respondents believe it will improve productivity.

“It signifies the buying community sees a direct correlation between networking investments as leading to more productivity gains than other forms of technology,” Bremner said in an interview. That was one of the unexpected results of the study, he said. “Among those who chose networking equipment (as a priority) they said clearly the reason was to improve productivity. In this instance, the market seems to clearly understand that if we invest in networking equipment we’re going to see productivity gains.”

Survey results also showed that an increasing concern about obsolescent equipment is fueling the increasing spend on networking gear. While last year 34 per cent of respondents – the largest group – said spending on this category was sparked by a desire to improve productivity, this year the biggest group – 32 per cent – said network spending was prodded by obsolescent gear.

“That was an interesting finding for us,” said Bremner, “because that helped explain the rapid uptake in additional spending (this year) in different types of networking equipment.” However, when asked about the obstacles delaying IT and networking projects in Canadian organizations, respondents suggested senior managers are to blame.

The leading causes of delays included the increased need to demonstrate the value of the technology to addressing business problems, to demonstrate or improve the return on investment of the project or that approval was now required at a higher level than before.

Bremner believes that managers prefer to buy technologies they can see workers use, such as wireless LAN equipment that links to laptops, as opposed to what he called “behind the scene” equipment such as switches with extra ports.

Another finding is that the capital cost of buying networking equipment was cited as the biggest inhibitor to purchases, followed by the obvious “don’t fix what isn’t broken” attitude.

Manufacturers of networking equipment could be interested in survey results that show overwhelmingly that the need to solve business-related problem and not poor network performance is the main trigger for buying this category of gear.

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