IT spending won’t ratchet up in the second half and companies are more cost-conscious than ever, but buyers are calling the shots and can get important concessions from suppliers.
These were a few of the conclusions outlined in a summary of a panel discussion that Goldman Sachs Global Equity Research conducted with CIOs from Fidelity Investments Inc., Procter & Gamble Co., SBC Communications Inc. and its own company.
While the findings obviously cannot be projected, when CIOs from huge companies talk, people listen.
As a group, the CIOs said they don’t see spending increasing in the second half, as some industry observers have anticipated. But they emphasized how buyers hold all the cards.
“We were struck by the almost-combative stance our CIOs took vis-…-vis vendor’s traditional sales and pricing tactics,” Goldman Sachs reported. “Our panel communicated a fierce determination to put greater scrutiny on purchases, squeeze maintenance dollars, get higher returns on their investments and eliminate unproductive time spent with too many vendors.”
In particular, CIOs are getting fed up with software vendors. They want products that don’t lock them in, better ROI and sweeter support deals. One of the clubs they are wielding in this battle is open source software, although the Wall Street firms on the panel were further along in using Linux than the others.
On the server front, Goldman Sachs said the CIOs were bullish about “moving aggressively toward Intel-based four- and eight-way servers and blade racks . . . mostly at the expense of proprietary” boxes such as those from Sun. None of them, however, appear to be wowed by Intel’s 64-bit Itanium processor, saying there isn’t much need for it.
In terms of PCs, Goldman Sachs said the CIOs have stretched desktop replacement out to four years and are cycling laptops every two to three years.
On both the software and hardware fronts, the CIOs expressed a healthy appetite for commodity, standards-based offerings. “Our CIOs showed consistent aversion to all things proprietary and enthusiasm for standards such as Linux and XML, as well as open APIs and standard messaging,” Goldman Sachs reported.
Regarding two technologies generating a lot of buzz: Three of the four CIOs are testing voice over IP, but none of them see a great enough “cost/benefit … to spur enterprisewide use”; and all of them seem to be brushing aside on-demand computing as hype.
One of the main take-aways seems to be: Given the current market conditions, you buyers are in charge. Demand more.