RealTime IT News

IT Studies Grapple With Ongoing Tech Slump

New studies from the technology research firms Yankee Group and Techtel point to the persistent challenges plaguing the enterprise information technology market.

The Yankee study said "enterprises are forcing their IT organizations to reduce operational expenses; but they also expect IT to help the company deal with competitive pressures by developing an infrastructure capable of delivering new applications to fuel new business initiatives."

Everyone in the technology sector has gotten used to doing more with less, as deep cuts in staff counts and departmental budgets have been a way of life for the past three years of the tech downturn.

Despite the downturn in the economy and lower IT budgets, however, the pace of technology has not slowed, noted Zeus Kerravala, Yankee Group Enterprise Infrastructure vice president.

Yankee said businesses have some tough choices about modernizing the hardware and software to run their operations, and some other emerging technologies that could potentially fuel future business.

"Companies soon must decide whether to upgrade existing applications and infrastructure or invest in new technologies such as unified communications, Web services, and utility computing, and determine how to leverage them for maximum gain," Yankee said in its report entitled "Align IT with Business Process to Optimize Performance and Management."

In a separate report, research firm Techtel said overall demand for IT slumped by 5 percent in the first quarter of 2003. But the firm also found that despite the war in Iraq, the SARS outbreak and lingering economic concerns, IT held its own, especially in the small business sector.

"Small-sized companies, those with 250 or less employees, especially those in business services (business, health, and finance) may be the bright spots in IT spending with a more positive outlook than the large companies we usually hear from," said Michael Kelly, CEO of Techtel Corporation.

"Forty-five percent of respondents in this category indicated that spending would remain the same with another 25 percent seeing an increase. Similar results were compiled for companies with 1,000 to 4,999 employees, where 21 percent projected an increase. In contrast, while 45 percent of respondents from large companies with 5,000 or more employees forecast spending to remain the same, a higher percentage, 35 percent, indicated a negative opinion on whether they plan to increase IT spending in the next year," Techtel said.

"The good news is that the IT sector managed to get through a challenging quarter intact," said Kelly. "Economically and politically, we've been through the perfect storm, and the industry has apparently weathered it with remarkably little negative effect."