IT sector sees fundamental change

Johannesburg, 31 Aug 2010
Read time 3min 10sec

Gartner analysts predict a fundamentally different shape to the IT sector as it struggles to recover from the worst recession to ever hit the industry - in terms of length and breadth.

Speaking at a media briefing yesterday afternoon, Gartner's global head of research, Peter Sondergaard, said 2009 was the worst year ever experienced by the industry, as all parts of it - hardware, software, services and telecommunications - were hit hard.

“Before 2009, only parts of the IT sector had been hit, while others had been resilient to the economic downturn. 2009 was the year in which all components of the industry were hit by the recession,” he said.

Earlier this year, Gartner stated that in 2009, spending on IT by public and private sectors globally had declined by 6.9%, although it was expected to rise by 5.4%, to hit $3.3 trillion, by the end of 2010.

“However, that recovery won't mean that the industry will just return to where it was. It is no longer the cyclic spending recovery the industry has seen in the past; rather, the industry has taken a massive hit and won't be the same again,” Sondergaard explained.

He said Gartner had warned of such a recession for the sector in the middle of 2008, when it recommended that CIOs prepare at least two budgets to cater for such an eventuality.

Sondergaard added that the recession had hit the US and European IT sectors particularly hard, with the latter still reeling from the impact of currency fluctuations as the euro weakened against other major currencies and the impact of government austerity measures.

Gartner analysts said that other markets, such as Asia and Africa, had weathered the financial recession and had not been hit that hard.

Val Sribar, Gartner VP and head of its applications research group, said the recovery in the software sector would be driven by enterprises looking at applications that will enable them to use social media to its full advantage.

“This need is being met by lots of little vendors designing applications that will integrate Twitter with Facebook - and this is an area where the big software vendors do not offer anything,” he said.

According to Sribar, the increasing use of social media by enterprises is connected to the rise of analytics, as business leaders ask questions about what the information they have means and what can they do with it.

“As enterprises mature, they are passing the point of debating whether or not they have the right information,” he said.

Patrick Meehan, Gartner VP and research director, said that business intelligence was becoming linked to analytics in that it is not only the hard numbers that matter, such as enterprises' financial results, but also the design and use of cognitive psychology in determining the information required to drive the enterprise forward.

“Reporting methods are being developed that use pattern-based systems to gather the relevant information that will help predict what the future needs will be and developing a set of leading indicators on a micro and macro level,” he explained.

Meehan said these leading indicators will be developed from a person working on a shop floor who lets management know what is needed when, to allowing the C-level executives develop similar macro-leading indicators to predict when an enterprise should take certain courses of action or not.

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