IT vendors nonplussed about economic slowdown

11 Feb 2008

Irish IT vendors are not anticipating the predicted slowdown in economic growth in 2008 to have a big impact on IT buying.

Ireland’s GDP growth is expected to drop to 3pc this year, down from economic growth of 5pc in 2007 and 5.6pc in 2006, but some of the leading vendors told they are unconcerned about any negative effects on IT spend.

“There will be a little bit of a slowdown in some of the public sector spend on IT, a little tightening of the belt but it’s not going to be massive,” predicted John McCabe, managing director, Damovo.

“I would be concerned we will talk ourselves into a recession,” he warned. “We’re still talking about just under 3pc growth. If you look at the performance of other European countries over the past few years, just under 3pc is not bad. Damovo is not seeing any effect on IT spending yet.”

McCabe pointed out that IT spending annually since 2002 has never matched the years prior to that and put this down to businesses being more savvy about technology investments.

“The days of putting in a solution because it is nice and fancy are long gone. Everybody is conscious of value for money and return on investment. Technology will save you money. A technology like videoconferencing for example will create savings on mileage, travel, time and hotel expenses.”

“We’re not seeing too much of an effect thus far,” said Richard Moore, information worker business manager, Microsoft Ireland. “There’s a lot of economic turbulence going on at the moment so we’ll have to see how the year turns out but we’ve been encouraged by seeing Irish companies invest in areas that will help their people compete in tougher times, rather than stopping spending and waiting for the good times to come back, which isn’t really going to work as a strategy.”

Mike Roche, chief architect at the Dublin Software Lab, IBM, anticipates there will be a market for new types of technologies in 2008. To illustrate this appetite, he noted that social computing software which IBM released in mid-2007 became the fastest-selling product in IBM software group history in its first six months.

“IBM finished 2007 at one of the highest points we’ve been at from a software point of view. The fact that this is a new market area means I’d be fairly positive that people will still be buying stuff.”

Kamran Ikram, head of Accenture’s workplace technology and collaboration practice, told the drive to compete in a potentially more challenging business environment would actually spur IT spending by firms.

“We are seeing more organisations implementing communication technologies. They allow companies to work more efficiently and be more cost effective. We will see that trend continuing. Some potential belt tightening this year for some organisations will promote take-up of these technologies.”

By Niall Byrne