Spending on technology will not return to pre-recession levels before the next downturn, analyst house IDC has warned.
In a gloomy market outlook, IDC said CIOs should expect their budgets to grow, but only to a lower level than was reached before the recession.
At yesterday’s UK launch event for the new Microsoft Windows 7 operating system, IDC research director Chris Ingle advised CIOs to prepare for continued difficult conditions. The highest realistic prediction was for a two per cent growth in spending by 2013, he said.
IDC expects only a one per cent growth in the Britain’s IT workforce in the next four years.
“Every time we have a recession, we never get back to the original spending levels,” he said. “IT budgets will not return.”
He added: “The problem is that while economic conditions are gradually improving, the demands on IT are increasing, and as before you’re going to have to do a lot more with less.”
Companies needed to prepare for contraction, consolidating infrastructure, the growth of cloud services, and tougher demands from users, he said.
Chief executives were looking for an “increased contribution” from IT, he said, but he warned that businesses needed to be very creative because many of the logical efficiency gains were made in the previous recession. “Last time around, chief information officers consolidated their infrastructure, outsourcing gained speed, and businesses pushed to compress their supplier margins.”
Nevertheless, businesses would have to find ways of consolidating infrastructure further, into a “less distributed, more powerful” setup. But he said virtualisation may be so mature in the UK that it is no longer the top solution. “After all that’s been virtualised, where do we go with it now?”
Predicting the “next radical stage in IT”, Ingle advised businesses to prepare for “public and private clouds converging, as there is more cloud resource out there”. Thirteen per cent of UK companies already use over seven cloud services, and Ingle expects the future norm to be a mixture of on premise and online.
“Cloud will only increase the users’ influence,” he added, “resulting in the decline of IT and maintenance staff.”
IT users will also become more demanding in the coming years, he said. “You’re going to have to allow reasonable and democratic access to your IT resources. Your applications – especially customer relationship management, enterprise resource planning, business and financials – are going to need to be more integrated so the right people can more quickly make judgements armed with the right information.”
Businesses should pay particular attention to opportunities to automate processes, in order to cut costs and increase flexibility. And improving visibility of project and financial management would also be a key area in which it is worth making changes, he said.