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A Historic Collapse in U.S. Corporate IT Spending

I just got this email today, but in a wierd sort of way it is good for IT consultants like me since many companies do not want to pay for a full time staff person. That is where I come in, offering a set hours per month, but at a far lower net cost than paying for a full-time employee.

A Historic Collapse in U.S. Corporate IT Spending
Article from www.ChangeWave.com 11-20-2008

By Paul Carton and Jean Crumrine

ChangeWave’s latest corporate IT purchasing survey shows an accelerating collapse in U.S. business spending that has reached historic proportions – with record pullbacks occurring both in the current 4th Quarter and going forward.

In one of the survey’s few upbeat findings, the corporate smart phone market continues to show growth – with Research in Motion (RIMM) maintaining its huge lead, but Apple (AAPL) continuing to make inroads in small to medium-sized businesses.

A total of 1,926 respondents involved with IT spending in their organization participated in the ChangeWave survey, conducted November 6-12, 2008.

IT Spending Breakdown

Simply put, the IT spending projections for 1st Quarter 2009 are abysmal – the worst ever for a ChangeWave survey dating back to 2001. An unprecedented 45% of respondents say their company’s IT spending will decrease (or there will be no spending at all) in the 1st Quarter – 16-pts worse than our previous survey.

Only 10% say spending will increase – a 3-pt drop from previously.

Most disturbingly, spending is plunging at a time of year when we normally experience seasonal increases. This becomes immediately apparent when you look at the change from each November – beginning with November 2003 – in the Projected IT Spending chart above.

We also asked respondents if their IT spending was on track thus far in the current 4th Quarter. By a wide margin, these results are also the worst on record.

Nearly four-in-ten (39%) say they’ve spent “Less than Planned” so far this quarter – 9-pts worse than in our previous survey. Just 8% have spent “More than Planned” – a 4-pt drop from previously.

Moreover, in the aftermath of the U.S. presidential election, respondents do not see any immediate improvement occurring in their company’s IT spending. In fact, nearly half (48%) now believe IT spending won’t pick up for their company until the 3rd Quarter of 2009 or later – a two-fold increase since our August survey.

Corporate Smart Phones

In the same survey, we also looked at the corporate smart phone market and found it’s actually showing growth. That is – 35% of respondents report their company plans to buy smart phones next quarter, up 1-point from August.

RIM (78%; down 1-pt) continues to garner the dominant share of planned corporate smart phone buying, but the Apple iPhone (22%; up 5-pts) shows considerable momentum going forward.

We note that RIM’s corporate share is heavily concentrated among larger companies (over 1,000 employees), while three quarters of Apple’s share is among small-to- medium-sized companies (under 1,000 employees).

Further confirming that the 3G iPhone is having a positive impact on the corporate market – nearly one-in-five respondents (18%) say the release of the 3G has made their company More Likely to purchase Apple products in the future.

Bottom Line

U.S. corporate IT spending is in the midst of a huge nose-dive, the likes of which hasn’t been seen before in a ChangeWave survey dating back to 2001. In short, the current ChangeWave survey findings virtually guarantee that we’ll be seeing the technology sector get hammered with pre-announcements before the January earnings season gets underway.

 

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