Top IT Spending Priorities in an Economic Recession

What IT projects will get funded when money is tight? Forrester, Gartner, and IDC analysts team up with real-world CIOs for answers.

By Tom Sullivan
Wed, November 19, 2008

InfoWorld — No company is immune from the economy's ebb and flow. So it's no surprise that, in the face of a fearsome downturn, IT shops are scrambling to figure out where they should cut.

The big three analyst firms—Forrester, Gartner and, IDC—are busily slashing their IT spending projections. Just last week IDC predicted that in the United States, IT spending will decline to negative 0.9 percent, down sharply from a pre-crisis forecast of 4.2 percent growth.

[ Just how severe is the impact of the economy on IT? Find out in " Is tech in more trouble than we think?" ]

With numbers like those, IT might feel inclined to panic. But now is the time to stand tough, advises Andrew Reichman, senior analyst at Forrester Research. "Companies should tighten their belts, not take their pants off," he admonishes.

At brokerage and investment banking firm Morgan Keegan, for example, CIO John Threadgill acknowledges that he has to "come up with better reasons" for the technologies to which he allocates IT resources. But after he eliminates or delays costs where feasible, Threadgill and his CIO colleagues must continue investing in certain areas, no matter how crazily the economy bounces up or down. "We'll continue to spend where we need to," says Threadgill.

So which technologies get funded rain or shine? InfoWorld consulted a range analysts and CIOs to arrive at a consensus: the five technologies IT shops must continue to invest in despite the recession. The common theme, says IDC chief analyst and senior vice president Frank Gens, is that "any technologies that can save companies money or reduce expenses will continue to thrive."

1. Storage: Disks and management software

"There are some things that just won't go back in the bottle," says Mark Raskino, Gartner fellow and vice president of emerging trends and technologies. "Storage is one of those."

Data keeps piling up and regulatory compliance mandates require that companies hold onto data longer than they've ever had to. To that end, IDC continues to estimate that spending on disk storage will double every two years, at least through 2012.

Another growth area will be "storage management tools that help IT get better use out of the hardware they already have," says Steve Minton, vice president of worldwide IT markets at IDC.

Forrester's Reichman suggests that thin provisioning, data de-duplication, and storage virtualization will prove worthy of investment. "Data de-duplication can improve performance, success rates, these types of things ... while storage virtualization is a way to be more flexible and move data nondisruptively."

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