Downturn may not see drastic cuts in IT spend

Analyst firm Pierre Audoin Consultants says companies now rely on tech so much that severe reductions in IT spending are unlikely

Investment in technology will not be severely impacted by the economic downturn, as companies will need to use IT to help them through the recession, according to analyst firm Pierre Audoin Consultants.

Businesses now depend on technology to such an extent that it will be vital in helping them boost efficiency, save money and retain customers, said Pierre Audoin Consultants (PAC).

Speaking to ZDNet UK sister site silicon.com, PAC chief analyst Christophe Chalons said: "There will be some adjustments, but there will be no full stop of IT investment."

While there are similarities between the current economic downturn and the dot-com crash in 2001, PAC said the current situation presents more of a parallel with that of the early 1990s, when the recession drastically reduced IT spending.

In today's recession, however, businesses depend much more on technology, meaning the reduction in IT investment is likely to be less severe.

"It is clear that companies are investing in IT to improve their performance, which means, even in a crisis situation, companies need to invest in IT," he said.

Chalons did note, however, that financial pressure will see companies having less money available to spend on IT, meaning investment will suffer to an extent. Big projects are a likely casualty, he noted.

"[There will be] no big bang, but a lot of tuning [and] improvement of existing systems," Chalons added.

This will form part of what PAC sees as the defensive approach that businesses will adopt to get them through the economic crisis. Other measures will include making the most of the existing workforce and focusing on customer retention.

Chalons said companies will probably resume a more attacking approach during 2010.