I am writing this at midnight, January 21. The DOW Industrials have seen their worst year opening performance ever. Asia and Europe experienced 5-7% declines today. Whatever is in store for the US tomorrow I thought it worthwhile to look at the outlook for IT spending.
As, apparently, the only industry analyst to call the end to the last IT spending recession it occurred to me that I have some responsibility to talk to the current outlook.
Yes, a general recession in the US is going to impact IT spending. Of the three or four major downturns I have experienced, spending on everything is cut back. It is just the way it is. For a public corporation to cut back on spending on IT projects is as natural as for the couple who have experienced a job loss to cut back on dinners out. But, this current financial crisis is just that, a debacle brought on by bizarre trust in financial instruments based on mortgages and several orders of abstraction from the monthly payments you and I equate with the term mortgage.
But, no. This situation is not going to translate into an IT recession. The bubbly activity sited in my current favorite video aside, there are such tremendous forces at work that IT spending will, I believe, continue at a survivable pace. What are these forces? Performance, throughput, and usability. IT investments are paying off in huge returns in productivity and business interactivity.
IBM, Dell, Apple, Intel. All healthy thank you. These companies cannot pull us through a recession when the likes of Merill Lynch, Countrywide, and just about every financial institution mis-judged their risk portfolios. But investing in their technologies is how the typical enterprise is going to reduce costs, increase productivity and gain a competitive edge. My message? Sure dump your banking stocks Tuesday. But do not sell IT short.