"Every single category--storage, computers, networking--is trending to be more cost-effective than a year or two ago," says Tony Scott, chief technology officer at General Motors, which has cut its IT budget by $1 billion, to $3 billion, since spinning off IT consulting firm EDS in 1996. In Scott's view, information security is among the only IT categories that carry a premium today.
To be sure, not all companies are growing as fast as GMAC or Point Biomedical. Nor does every enterprise have the bargaining clout of GM. For the average IT buyer, deals may be fewer and farther between.
Still, IT spending won't exactly snap back overnight. Gartner, for instance, predicts a 5 percent increase in U.S. IT spending next year, excluding telecom services but including some consumer-technology categories. Gartner's Reynolds cautions that even that figure may be overly optimistic.
"We based our numbers on expectations expressed in surveys this year, which could decline as pen is put to paper" this budget season, he says. In fact, real demand proved to be as much as 30 percent weaker in the second and third quarters of 2003 than users surveyed by Gartner had projected.
IDC also projects a 5 percent increase in IT spending worldwide in 2004, but says its forecast is conservative. A Goldman Sachs survey of Fortune 1000 CIOs conducted in August foretells IT spending growth of 2.3 percent in 2004, down from the 3.5 percent growth predicted in June. Fifty-three percent of the 100 CIOs surveyed said they anticipated that budgets will grow, versus 25 percent who expected to cut spending.
"Rebound may be an aggressive word," says Robert Reeder, CIO of Alaska Airlines. "But anything better than what we've been going through would be an improvement. I'm not sure we'll ever see the exuberance of the '90s again."
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