IT Spending Recovery Seen in 2004

The planets are finally in alignment and market researchers are now predicting a recovery in IT spending. A combination of technology advances, architectural changes, market forces, and best practices will make for a good recovery for IT in the near future, culminating in very strong growth in the longer term, according to Al Lill, group vice president for market researcher Gartner. "Overall IT spending has bottomed out, and 2004 and 2005 will see a minimum of strong single-digit growth over 2003 levels," Lill says. Although overall IT spending will increase, the growth rates of specific technology sectors are expected to vary widely. The crest of the new wave of growth is expected to impact four key areas: secure wireless broadband, very low-power-consumption mobile devices [and screens], easy access to real-time infrastructure, and the widespread pervasion of service-oriented architectures. Gartner says more companies are planning to replace aging equipment, to install new technologies to improve efficiency, and to boost spending on devices that use open-source software and wireless communications. "Companies are beginning to make the turn from protecting profitability to driving growth," Michael Fleisher, chairman and CEO of Gartner, said at an industry symposium late last month. "Cost cutting will remain important, but it will no longer be your CEO's number one priority." Gartner also predicts that the recovery will come with a variety of shifts. The firm claims that there will be "a tremendous skills shift within the IT workforce, impacting hundreds of thousands, if not millions, of workers." Workers with skills in the areas of broadband, wireless, Linux, content management, real-time analytics, data-mining, security, middleware, certification skills, business intelligence, and knowledge management are expected to be the most highly valued. Gartner analysts also expect massive vendor consolidation through 2005. At that time more than half of the current technology suppliers will be eliminated from the competitive landscape. As a result the remaining vendors will regain pricing power in several technology sectors. For example, Lill says the combination of secure broadband wireless, low-power-consumption mobile devices, and new display technologies will dramatically change a handful of industries, including publishing, media, and advertising.