It’s official: the tech downturn is over; the good times are back. The market will grow this year; the only question is how fast. This positive assessment of the outlook for the IT market was delivered at an IDC industry briefing in Dublin yesterday.
The market watcher, whose forecasts are normally considered to be at the conservative end of the spectrum, predicted that the global IT market would grow by 5-7pc annually between 2005 and 2008, although growth rates could reach as high as 9pc if external factors, such as US economic performance, were particularly favourable.
The research analyst also forecast that Ireland’s growth would outstrip that of our European partners. Against European annual average growth of 5pc in the coming years, the Irish IT market’s growth figure would be in the low teens.
Speaking at the event, Steve Minton, director, worldwide IT markets and strategies, IDC, commented: “Ireland is one of the few countries in Western Europe that we expect will reach double-digit growth in the coming years.”
Minton noted that as the recovery takes hold, IT departments would face very different challenges to those of the recent past, where cost-cutting and efficiency were the priorities.
Referring to the results of a recent IDC survey of UK and Irish executives, Minton said that, on the positive side, business leaders are much more optimistic about the economy and the profitability of their own companies than they were a year ago.
On the negative, skills shortages are being experienced in certain sectors as the demand for IT professionals grows. In addition, organisations are remaining cautious about spending money on IT – a probable hangover from the spending excesses of the technology boom.
The survey also found that the single biggest factor currently driving IT growth in Europe is the ageing technology infrastructure (defined as hardware such as PCs, servers and network equipment as well as essential software systems) in place in many organisations. “There is a big fear of infrastructure starting to break down,” said Minton, noting that the spending freeze of the past three years had taken its toll on internal IT systems.
Minton also reported that the long-awaited ‘PC refresh’ seems to have started in many organisations, while sales of PDAs, printers and network equipment are likely to grow well between 2003 and 2008, particularly in the Irish market but also across Europe.
If infrastructure spending will rise significantly this year, so too will spending on new software applications. The big-ticket items will be security, business intelligence and web services software with e-commerce and mobile computing applications not far behind. Interestingly, CRM looks set to stage a significant revival.
“Two years ago, CRM was seen as the poster child for where IT had gone wrong and was widely associated with long implementation times and low return on investment. But CRM is starting to come back: over 20pc of companies say they have identified it as an area for increased spending in the year ahead,” Minton remarked.
In contrast to the ‘big bang’ approach to CRM that was common in the dotcom heyday, however, the trend now is towards modular or phased implementation to make CRM projects shorter and more manageable, he added.
By Brian Skelly