• April 14, 2009
  • By Jessica Tsai, Assistant Editor, CRM magazine

Global Technology Spending: Declining This Year, Rising in 2010

Forrester Research released its 2009 Global IT Market Outlook earlier this year, reporting that global technology purchases will amount to $1.66 trillion in 2009, a 3 percent decline, after an 8 percent increase in 2008. While the decline may not be a surprise given today's economic conditions, it's worth noting that not only will there be fewer purchases in a recession, but American vendors will see their revenue earned from offshore sales is highly vulnerable to fluctuations in currency, putting them at a disadvantage given a strong dollar. On the bright side, growth is predicted to rise by 9 percent in 2010.

According to the report, technology investments include business and government purchases of:

  • computer equipment;
  • communications equipment;
  • software;
  • technology consulting and integration services; and
  • technology outsourcing.

"2009 is going to be a tough year," says Andrew Bartels, vice president and principal analyst at Forrester Research and author of the report. Nevertheless, he says, "it does position [the industry] for a much stronger 2010." According to Forrester's outlook, the end of 2009 will make the early stages of a new technology cycle of growth, which will create more demand in the market. Simply put, it's just a matter of time. "We are now close to 2010 than we were three months ago. We're further into the downturn and close to the end [of it]." In fact, Bartels says, 2010 won't be a soft recovery, "it will be a much firmer, much more aggressive [one]."

Like any other purchase businesses make, technology is considered a cost. However, businesses understand that the efficiency enabled by technology and process automation is critical, especially in today's economy. "Don't be penny wise and pound foolish," Bartels says. "If a technology investment is going to save you $2, or $3, or $4, for every dollar [you spend], you'd be silly to be cutting your technology investment and causing other costs to be higher as a result."

Technology, he says, is by no means recession-proof, but its benefits certainly put it on the bottom of the list of areas to cut:

  • Software will actually see no decline, and no growth, in 2009, with purchases amounting to $388 billion, it will have the strongest recovery in 2010 at 10 percent.
  • Communications equipment (routers, switches, private branch exchanges, videoconferencing equipment, and unified communications equipment) investment will decline by 3 percent to US $353 billion, with growth in 2010 projected at 8 percent.
  • Computer equipment (personal computers, servers, storage devices, peripherals) investment will decline by 4 percent to $434 billion, with growth in 2010 of 7 percent.
  • Global IT services and outsourcing will decline by 3 percent, to $484 billion, with growth of 9 percent in 2010.

The cost savings make sense, Bartels says. Companies that, for instance, refreshed their equipment every two years are opting to hold out another year before embarking on an upgrade. CRM is probably more vulnerable to being cut than business analytics tools or ePurchasing applications. While CRM provides valuable information regarding consumer analytics and self-service capabilities, CRM is typically seen as a revenue generator rather than a cost saver, Bartels says, which puts it low on the list of priorities for companies losing revenue.

The forecast is based on the anticipation that the current recession in the U.S. and other major economies will begin to recover toward the end of 2009 and into 2010, the report says. If the global economy continues to worsen into 2010, technology growth will subsequently worsen. If the dollar weakens, however, the U.S. could actually see smaller declines or even positive growth.

News relevant to the customer relationship management industry is posted several times a day on destinationCRM.com, in addition to the news section Insight that appears every month in the pages of CRM magazine. You may leave a public comment regarding this article by clicking on "Comments" at the top; to contact the editors, please email editor@destinationCRM.com.

CRM Covers
for qualified subscribers
Subscribe Now Current Issue Past Issues

Related Articles

Gartner Predicts the Future of Sales and Marketing

The analyst firm gives its CRM forecast for upcoming years.

Technology Needs to Be Lean and Mean

Forrester Business Technology Forum '09: It's not only hip -- it's critical -- to be lean today, especially when waste is a significant cost to companies. To do so, however, technology and business need to start communicating in terms both can understand.

The Future of Technology: Where Are You Headed?

Forrester Services and Sourcing Forum '09: Technology teams are forced to re-evaluate their goals amid tech-industry upheavals in both delivery and cost.

Forrester Unveils Consumer Technology Benchmark

Survey results of more than 40,000 American households shows that technology will continue to see strong adoption in daily life.

12 Technology Predictions for 2009

Analysts weigh in on content management trends for the New Year.

Technology and the Digital Client

A new reality emerges for the people-process-technology mix.

Don't Forget the Little Guy

Demand for a technology in the small-business segment depends on installed base, perceived need, and business size, according to a Jupiter Research report.

Caring for Users of Technology

Another inconvenient truth.