Stability Is The New Growth For IT Economic Outlook - InformationWeek

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7/10/2008
10:03 AM
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Stability Is The New Growth For IT Economic Outlook

"If you're not growing, you're dying." This adage of the dot com boom has given way to business leaders scaling back budgets and feeling bullish about holding the line on spending and flat growth projections. Yet in the face of stasis, midsize business IT decision makers are cockeyed optimists with growing budgets, but small businesses are having none of it.

"If you're not growing, you're dying." This adage of the dot com boom has given way to business leaders scaling back budgets and feeling bullish about holding the line on spending and flat growth projections. Yet in the face of stasis, midsize business IT decision makers are cockeyed optimists with growing budgets, but small businesses are having none of it.With the usual disclaimer that every survey, study, report, and chart has a counterpoint waiting to be found, we turn to the latest CDW IT Monitor. This report, released every other month purports to be an indicator of the direction and momentum of the IT marketplace. And according to the latest installment, that direction is steady, level, and that should feel good.

The heart of the CDW report is an index based on data from 1,000 IT decision makers and combines a measurement of the value of IT in supporting organizational objectives and calculation of future IT expectations. As you can, see from the chart, there's not a hockey stick in sight. In fact, the latest index reading is exactly the same as it was in February, after dipping in April.

CDWITMonitor

From this level reading, CDW concludes that confidence is becoming more stable. Much of that tepid conclusion is based on the finding that 51% of businesses predict IT budget increases in the second half of the year. But wait, that's the overall number: midsize businesses are expecting budget increases of 64%. In relative terms, that's a 2% percent gain for business overall and a 10% leap for midsize companies.

So what do midsize companies know that everyone else is missing? It could be the data. Flipping over to another IT spending survey from Computer Economics and you'll find predictions of growing IT spending, but at a 1% lower rate than 2005 -- adjusting for inflation makes that gap wider.

Or it could be unique to midsize business. According to CDW, small businesses are not confident and not spending: 27% plan and IT budget increase in the next sixth months and only 9% plan to hire IT staff. That's a sharp contrast to the 25% of midsize business and 41% of enterprises that plan to do some IT hiring before year-end.

Note that this data inverts another recent dataset from ADP that found small business hiring up and midsize business hiring down -- in fairness that was a glimpse of overall hiring, not just IT. Of course, if you ran these numbers today after Cisco's bad news, the outlook might be worse than flat.

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