By this time next year, IT budgets should be back to their pre-recession levels for the vast majority of Canadian small-to-medium businesses, according to CDW Canada Inc.
The Toronto-based technology provider polled just over 100 SMBs at a recent customer conference about their future IT spending habits. About 82 per cent of respondents indicated that they believe IT budgets will return to normal before Q2 2010, with 43 per cent of those respondents actually expecting this to happen before Q4 2009.
Daniel Reio, senior manager of marketing at CDW Canada, said that while improving economic forecasts have certainly played a role in these responses, many companies are realizing they can only go so far with the technology they currently have in place.
“There was an opportunity to go on a bit of a cautious spending timeframe, but the reality is that it’s got to come back around,” he said, adding that because IT is increasingly being regarded as a competitive differentiator, it could be one of the first areas to get its budget back.
Reio said that this IT spending improvement will be quite broad and should be seen across the board in software, hardware and services.
“We’re seeing strengthening in the software market, people looking at ensuring their protected with security software, but on the hardware side, we’ve seen lots of opportunities too,” he said, adding that virtualization in particular is driving the need for bigger servers to support growing virtual infrastructure.
CDW Canada added that respondents still consider cost savings to be an important concern with about 76 per cent of respondents citing it as their top IT concern. Other concerns include that cracked the top five for respondents were data security, disaster recovery, desktop management, and data backup.
In its recent mid-year IT spending forecast, Forrester Research Inc. made a similar forecast when it predicted global technology spending to drop by 10.6 per cent this year compared to 2008. This is a dramatic change from the 3 per cent decline the research firm previously predicted at the start of the year.
The reason for the change, according to Forrester analyst Andrew Bartels, is that IT shops cut capital investment far more than they needed to during the first half of 2009. “We overreacted here,” he said, referring to both IT buyers and government leaders in response to the global recession.
The good news though is that the economic damage is most likely in the past and the numbers will be significantly higher in 2010. This is due in part to organizations cutting back on too much capital investment in Q4 2008 and Q1 2009, which will set a low base for positive year-over-year growth to occur as early as Q4 2009.
“You got companies running on almost two years of cuts,” said Bartels. These firms can only put off upgrades for so long and he believes the upgrading and a potential worldwide revival will begin by year’s end.
The news could also be music to Microsoft Corp.’s ears, he said, as a lot of companies looking to make PC upgrades have decided to wait for the company’s new Windows 7 OS. The release is largely seen as “a release that fixes the problems with Vista” and could be embraced by many corporate IT managers who have been historically slow to keep up with Microsoft’s upgrade schedule.
Reio agreed, saying that the aging Windows XP platform, coupled with the more positive early reviews surrounding Windows 7’s launch should give the OS serious traction over the next 12 months.
– With files from IDG News Wire