Gartner Attendees Holding The Line On Spending

Gartner Group said worldwide IT spending growth in the United States will likely close at a modest 3.3 percent, or $856.9 billion for the year, and will grow 6.9 percent in 2003, to $916 billion.

The prospects for double-digit growth overall are slim, said Michael Fleisher, Gartner's CEO, in a keynote address opening up this week's conference, which was attended by 5,000 customers. "There is essentially no prospect for a broad-based recovery in the technology industry as a whole in 2003," Fleisher said. "Even if the economy surprises us and improves dramatically in 2003, the tech sector will see only modest improvement."

Fleisher told attendees that they should consider locking into long-term contracts now, even if the need might not immediately surface. "Let's face the basic facts" Fleisher said. "The industry as a whole has significant excess capacity. There is no killer app that will appear in 2003 that's going to radically stimulate demand. Pressure on companies to deliver earnings will continue unabated, which will drive constraints on spending of all kinds, obviously, including technology."

Many attendees at the Gartner conference said they have indeed been able to put the squeeze on their suppliers. For example, Sallie Trotter, director of operations at Radio Shack, said she's been able to get discounts of up to 40 percent on both hardware and software. "It is a prime time to get value and renegotiate contracts," Trotter said.

At Radio Shack, discretionary expenditures like knowledge management tools and CRM will be put on hold. Others are putting nonessential expenditures on the back burner as well.

Attendees at the Gartner conference generally agreed that the outlook for the coming year will remain cautious. "We're anticipating things will continue to be tight," said Phil Ostrofsky, vice president of technical services at Neuberger Berman, a financial services firm based in New York "Anything that can wait will."

Like many customers, Ostrofsky emphasized that core infrastructure and applications that are required are not being sacrificed. For example, the firm is now putting in an e-mail monitoring system to ensure compliance with the Securities and Exchange Commission. What will it take to free up some funds at Neuberger? "It's all resting on the stock market," Ostrofsky said.

Even those with major IT initiatives such as Walt Disney, are putting less critical initiatives on the back burner. "There's no question the economy impacts our spending," said Michael Tasooji, Disney's CIO, who is overseeing the building of a shared services architecture that may eliminate the need to revive many of them. "Instead of doing 200 projects, we're doing 15. Will we pick those up, hopefully not, some of these smaller systems requirements may go away."