Don More, Partner
Lessons Learned From IDC Directions Conference 2009
For 44 years, research firm IDC has sponsored an annual conference on the future direction of information technology. The event is dominated by presentations given by senior IDC analysts across IT sectors. Appropriately called “Directions,” this year’s conference, held in March with similar events in San Jose and Boston, provided reassurance that technology remains a robust industry and will recover – perhaps sooner than the overall economy.
While one keynote speaker, chief research officer John Gantz, described the current downturn as the “worst since before PCs were invented,” he said there is no need to “freak out.” He noted that even in the worst-case scenario (as currently envisioned) worldwide IT spending is expected to turn upward sharply later this year, from less than 1% in 2009, to 4.4% in 2010 and 5.9% in 2011, much faster than overall GDP growth.
Further, today’s recession will help catalyze tomorrow’s innovation, “blowing apart” many business relationships and models, which may be for the better as that would provide innovators with opportunities to fill gaps created by uncertainty. As one speaker observed, GE and IBM were both founded during recessions, HP was created on the tail end of the Depression, and FedEx started during the 1973 fuel crisis.
From the feast of knowledge and ideas that was the conference, here are some interesting morsels that came out of various sessions:
- Small- and medium-sized businesses (SMBs) represented half of total IT spending ($1.03 trillion) in 2008, and three-quarters of SMB spending represents businesses with fewer than 500 employees. SMB spending is outpacing enterprise spending. The difficult environment is accelerating the move of big vendors like Cisco and IBM downward.
- Best definition of cloud services I’ve heard to date encompasses three main ideas: 1) shared services, 2) under virtualized management, and 3) is accessible over the Internet (by people and other services) via Internet standards.
- Security is the number one challenge preventing cloud services from gaining traction (with performance close behind).
- Information access costs $3,300 per employee per year which drives demand for better search and sharing tools for enterprise content.
- In 2008, more than half of Internet users viewed videos online and utilized social networking; the percentage continues to rise.
- Environmental sustainability will become a mandatory government requirement so get ready. Impending regulations will drive early initiatives in water usage, carbon emissions, hazardous materials, labeling, and performance reporting.
- 300,000 physicians have blogged, 80,000 participate in online communities, and 508,000 use online video.
- Most IT spending growth in 2009 and beyond will occur outside of the U.S. There will be greater than 15% annual growth in IT spending in Brazil, China, India, and Russia.
- Today, customer ROI discussions center around short-term returns. They are asking, “How much will this save in the next 12-18 months?”
- Managed security was a $2.6 billion market sector in 2008, and it is projected to grow greater than 15% annually.
- SaaS spending will grow 5x faster than “all applications” spending.
- Growth in mobile data revenues (60% in 2008) is not commensurate with growth in data network traffic (492% in 2008). This creates pressure for business models to fund necessary infrastructure projects to support explosion in traffic demand.
- By 2010, nearly half the planet will use mobile devices and 25% of the world will have access to the Internet.
- Work/pleasure and location distinctions are rapidly blending as “Web 2.0-savvy” young people enter the workforce. This is forcing changes in IT models across the board.
Broad conference take-aways from these and other facts are: first, that powerful underlying trends (the world is going online and mobile; cost cutting initiatives are driving services into the cloud) are going to drive IT demand growth for the foreseeable future; and, second, that those trends are reworking traditional IT ecosystems, creating new opportunities and challenges for vendors of all stripes and sizes.
