IT - Show Me Where to Spend the Money

July 24th, 2008 by Julia Lim

A recent Goldman Sachs report explains the results of the company’s survey of 100 IT execs (mostly CIOs). IT spending growth will slip from 7 percent to 5 percent in 2008.

An interesting excerpt:

“CIOs have emphasized to us that they are buying on a need versus want basis, are often downsizing deals to fit with current budget constraints…In fact, contrary to general tightening in spending, purchases with an especially compelling ROI are being accelerated in the current environment.”

Hmm. Certainly we all understand prioritizing what to buy on need versus want– my friend who runs an art gallery that has only sold one piece in the past 2 months can certainly explain it. I “need” that Picasso? But does it take the entire economy slowing down before CIOs, even at Fortune 100 companies, to focus on ROI? So it’s not surprising what showed up at the top of the list for spending priorities for 2008-2009:

1. Server Virtualization
2. Server Consolidation
3. Cost Cutting

At the bottom of the list, grid computing and on-demand computing.

Compare this to last year’s spending survey where the top 10 priorities by rank were:

1. Applications integration
2. Security
3. Cost Cutting
4. BI
5. ERP
6. Web-based app development
7. Datacenter consolidation
8. Disaster Recovery
9. Compliance/risk management
10. Identity and access management

So in one year, the very hot “server virtualization” (and quite similar server consolidation) jumped to the top of the spending priority list. Can anyone have predicted just how much mindshare virtualization would capture in such a short time? Virtualization is not a new concept; it just seems that way. What will be # 1 next year?

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July 24th, 2008