Gartner sees no economic recovery in sight

The economy 'remains awful', but it's not all bad: there has never been a better time to drive a good bargain with an IT vendor, says Gartner

Gartner's chief executive officer, Michael D. Fleisher, opened the analyst firm's annual Symposium/ITxpo in Cannes on a gloomy note on Monday. Despite the media continually looking for green shoots and talking up the recovery, he said, "the reality is that the economy remains awful," and there is little prospect of a broad-based recovery in 2003. For IT vendors the market is the most challenging. "There is significant over-capacity in the technology industry," said Fleisher, and what's more, no killer app will emerge to stimulate demand in 2003. "Companies will continue to constrain costs and spending," he predicted. And yet the very pain felt by vendors could contain the seeds of recovery. There has never been a better time to drive a hard bargain with a technology vendor, said Fleisher. Many companies are seizing the opportunity and "are acting now, often aggressively renegotiating their contracts with extremely anxious vendors... in an industry that's consolidating, where there is tremendous over-capacity and where it's a buyers' market, you sit in the power seat." Chief information officers should take the opportunity to invest now, he said. "It's time for all of us to take things into our own hands, to make the right choices that will improve our companies in the future, regardless of the environment in which we are living." Fleisher offered a three-point plan for survival and growth: focus on high-value customers, cut costs and plant the seeds for future growth. Fleisher urged the conference to abandon the hope that the good times in enterprise IT to would return. He predicted that some famous brand names in IT would disappear before we are out of the recession and that the industry will have to accept growth rates of 10 percent -- in line with other industries -- from now on.


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