Tuesday, 10 February 2009

Jolly hockey sticks

(By Richard Holway) Good to meet many readers at the Regent Conference yesterday.

This was the 14th Regent Conference and I think I have attended 12 of them. Each year the CRO from one of the world’s largest research firms presents their forecasts for global IT spend. During those 14 years, IT growth has been greater than in the preceding year in 8 years. No wonder we all got very used to ever increasing growth! But growth rates reduced in three years and growth was negative in another three years.

However, checking back through my Regent Conference folders, I can’t find any forecast growth chart from any of these firms which shows anything other than continued high growth or a ‘hockey stick’ return to growth in the year to come. There was never any forecast of negative growth. In other words, these firms have got the trend line seriously wrong over 40% of the time.

At this year’s Regent Conference John Gantz from IDC (who I have both known for a long time and have considerable respect for) presented the forecast in the chart below. IDC have revised these forecasts down several times in the last six months. In Aug 08, IDC were forecasting Worldwide IT growth in 2009 of 5.9% (an increase on 2008) (By the way, Forrester at last year’s Regent Conference forecast double digit growth for 2009 and 2010 - see my Hope is not a Strategy post earlier this week) Now IDC is forecasting growth of just 0.7% for 2009. But, as you can see, the classic ‘hockey stick’ chart again shows a return to 4.5% growth in 2010 and ever higher in the following years.

I publicly took issue with Gantz over this. I think it is too optimistic and many in the audience seemed to agree with me. I think we will see declines in 2008, 2009 AND 2010 with a return to very modest growth in 2011. It’s not just the economic downturn to blame – it’s a major change in how and what IT people buy.

Trouble is that all this really matters. Organisations will take decisions based on these forecasts. If they see this kind of bounce coming as soon as 2010, they might put off taking the hard decisions needed to be taken now.

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