Economy is Delaying -- Not Cancelling -- IT Projects

Posted by Mark Brousseau

The financial crisis has had a significant impact on the client computing industry in 2009, as witnessed in a survey by Gartner, Inc. that showed far more PC projects are postponed or scaled back this year rather than cancelled outright because of tighter IT budgets. Only 12 percent of those surveyed indicated they have outright cancelled a planned project since October 2008. The survey was conducted from late February through early March of 2009.

"Enterprise belt-tightening has had a tremendous impact on the client computing technology segment with 43 percent of respondents expecting a decrease in spending on client computing hardware in 2009 compared with 2008," said Andrew Johnson, managing vice president at Gartner.

Gartner forecasts overall IT spending to decline 3.7 percent in 2009. Spending on IT hardware, including client computing (PCs), servers, storage and printing systems will bear the brunt of budget cuts with spending expected to decline 14.9 percent. Gartner forecasts overall IT spending to rebound with 2.4 percent growth in 2010, although IT hardware spending will continue to lag next year, growing just 0.8 percent.

Despite the bleak outlook, Johnson said that there are some brighter spots for the segment with certain applications getting increased spending and some countries and industries reporting more-optimistic plans. He said that more client computing projects will be postponed or reduced in 2009 than will be eliminated, and technology and service providers should ensure that they are ready for the recovery, when and where it happens.

The survey pinpointed some important differences in how companies in different countries are maintaining, delaying, reducing or canceling many ongoing client computing projects. Although 48 percent of all respondents indicated some of their PC projects would be deployed as planned in 2009, respondents in China (85 percent) and India (64 percent) were more optimistic and expected most of their projects to be deployed as planned. In contrast, only 29 percent of U.S. and 18 percent of French companies planned to continue their client computing projects as originally planned.

Significant vertical market variations were also revealed by the survey which found that the industries most on track with their client computing plans were insurance, media and consumer business services. Companies involved with telecommunications, wholesale, and agriculture, mining and construction are most likely to be planning to reduce spending. Postponements are more likely in retail, utilities and wholesale companies, and project cancellations were above average in discrete manufacturing. Only one out of 45 respondents in the financial services industry indicated PC purchase plans were cancelled, and in this sector, reduced, postponed, and as-planned responses came in near the averages.

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