According to a New York Times writer, Gartner released a report that states, "Information Technology Spending to Hit $3.6 Trillion in 2012." If that's true, then get ready for the approaching "Tech Bloom." Tech Bloom is my term that differentiates itself from Tech Bubbles by the fact that a Bloom is based on actual money not just hype. The report states that most of the increase over 2011 is due to increased spending on cloud services. Additionally, the report says that, "By 2016, this expenditure could nearly double, to $207 billion." I think that cloud spending will be even higher, reaching closer to the $500 billion mark by 2016.
I haven't done any independent research, polled or interviewed hundreds of CXOs but I can tell you from the trend of doing more with the Cloud is headed our way.
But, what exactly, does this Tech Bloom mean to you and me. It means that cloud-oriented software and services companies will flourish. That means new hiring, new opportunities for startups and new opportunities for independent consultants.
There is a significant knowledge gap that needs to be filled.
This is where you come in.
Companies of all sizes are hungry for technical people who know something about cloud services. If you've worked with Amazon's cloud, a private cloud or a hybrid cloud, there are lots of people who want to talk to you. Sure, there are lots of people out there who can spout this cloud thing or that cloud thing but when it comes down to actually knowing anything, they don't.
So, if you have any cloud experience at all, update your resume and send it around. Trust me, you'll hear back quickly.
Opportunity in the technology sector is nothing new but somehow the Cloud offers a lot more opportunity for innovators and creative engineers. Every week I hear of at least one new startup trying to get some attention for their product or service. Most of them are very good. And, a lot of them are very impressive. Some of them will be responsible for the increased spending on technology over the next few years.
Now, you might be saying, but wait, that $3.6 trillion only represents a 3% increase over 2011 spending. I think this is where we lose sight of just how much money we're talking about. 3% of $3.6 trillion is $108 billion. That's the amount of money you'd have if every man, woman and child in the United States put $360 into a bank. That's a lot of money.
Additionally, the article states that, "These analysts also saw a 2.3 percent increase, to $864 billion, in fees for technology service."
The proverbial 'bottom line' is this: Companies are spending more on technology because they need that technology to stay competitive, to save money over the long haul and to handle addition demand. Say what you want about cloud hype but hype doesn't pull in the kinds of numbers that analysts are seeing. It just doesn't.
So, earlier, I stated that, " I think that cloud spending will be even higher, reaching closer to the $500 billion mark by 2016." That is probably a conservative estimate because, if you think about it, a lot of our common services will be moving to the cloud.
For example, the article states that, "Gartner forecast that companies would spend $1.69 trillion on telecommunications this year, up only 1.4 percent from 2011. Fees for these services tend to be dropping, but Gartner cited increased demand from developing economies, as well as the rising demand generated by the boom in connected devices, like tablets and game consoles."
I think that spending on telecommunication will decrease significantly as cloud spending increases. The reason is that many of our 'old school' services will be migrated to cloud-based ones. We'll use Internet communications and cloud-based storage/backup for every device we own. That part is already coming to pass with services like Dropbox, iCloud and others.
VOIP will take over more and more standard communications as bandwidths increase and as our global network strengthens and expands.
Remember that every few years tech spending waxes and wanes. It's the nature of business. You have to position yourself at the right time to ride the waves when they're high and smart enough to reposition when the tide goes out. For the next several years, even in the face of economic slowdown, tech spending will increase. It has to.
However, I think these financial analysts need to be realistic. Every quarter I read where some company missed its projected earnings and that's going to cause a layoff or downsizing or whatever. It's nonsense. Utter nonsense.
It annoys me greatly to see these kinds of predictions and results. The part that's really annoying is that the people at the top of the corporations are to blame for any missed projections. They aren't doing any belt-tightening. They layoff the low paid workers at the bottom of the food chain who have no control. It's a very bad way to do business.
Fortunately, there are companies out there that are bucking the system, thumbing their noses at the analysts and doing quite well at it. Those are the companies who will take their share of the increased tech spending.
To the CXOs of the companies who live and die by analyst opinons, I have one thing to say: Take care of your customers and ignore the analysts.
If companies would take care of their customers, the analysts wouldn't have a job. Customers will be loyal and spend money to make things work. But, you have to put the customer first--not yourself. Sorry, but that's the reality of it.
In the old days, I used to hear, "The customer is always right." That hasn't been the case for a long time. However, if you watch which companies are successful and which ones struggle or fall away into oblivion, you'll see that the successful ones know their customers and support them to the best of their abilities.
If you have happy customers, you'll have successful customers and a successful business yourself. You'll reap the rewards of the increased tech spending. Your stock prices will go up. Without customers, you have no business. If you want your bottom line to increase, you have to make your customers happy. Stop working for the stockholders and start working for the customers or you won't have either to worry about.
Where do you think tech spending will increase over the next few years? Do you think the tech sector will take over traditional services and convert them to Internet ones? Talk back and let me know.