Wither Silicon Valley? IT will be driven by emerging markets

Gartner is projecting that the "worse year ever" for IT spending---down 6.9 percent in 2009---will be followed up with dead-cat spending bounce in 2010 of a meager 3.3 percent. Does this dead-cat IT spending bounce mean traditional tech power centers---notably Silicon Valley---are no longer in the driver's seat?

Peter Sondergaard, senior vice president of research at Gartner, said at the research firm's Symposium in Orlando that 2009 was the worst spending cycle ever (including 2001). And half of companies will face no budget increases or a decline (see Gartner's projection).

But his main point is that Silicon Valley will no longer be in charge of the rebound. To wit: The U.S. has trust issues, spending declines and increasing technology risks. Sondergaard said that previous rebounds were led by emerging markets. And given that effect will be magnified going forward, "Silicon Valley is no more in the driver's seat," said Sondergaard. As emerging regions resume strong growth and IT spending accelerates there will be "a culturally different approach to IT."

In the near future---2011, 2012 and beyond---emerging markets will increasingly shape how IT is deployed.

The point is an interesting one. We've heard about the death of Silicon Valley forever and Sondergaard is pitching that the BRIC countries (Brazil, Russia, India and China) will drive IT spending and how it's deployed. In the future, the tech centers may be India and China.

Among other key themes from Sondergaard and his merry band of analysts:

• Things are so bad that federal spending on IT is the new emerging market.
• There will be a continued shift from capital spending to operating expenditures.
• Equipment is getting older. In 2010 will be dominated by old equipment. The point: Enterprises have to prepare for increased failure rates. CFO comments like "it still works why replace it" will be the norm.
• A million servers around the world will have their replacements delayed. That's 3 percent of the installed base. By 2011 that tally will be 10 percent.
• The application roster is bloated. Gartner analyst Andy Kyte noted that companies have a bunch of orphaned applications. When it comes to applications companies are interested in making babies (acquiring software), but not responsible parenting (having any discipline about their application portfolio). Get control of the application portfolio. Everyone is in denial.
• Top 2009 topics were cloud computing, cost and ERP/supply chain management.
• CIOs will need to have a budget based on a rolling forecast. The key will be to position for growth while still cutting expenses. 2010 will feature focus on improving applications and the processes around them.
• The aim for companies will be to create what Sondergaard dubs "pattern-based strategy." In a nutshell, this approach means developing strategies that adapt and react to changing conditions automatically.