IT Spending Outlook 'Suggests Caution,' Survey Says

But storage is among spending priorities, according to Goldman Sachs survey

October 10, 2007

3 Min Read
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IT spending will remain stable through the end of 2007, but it will likely decelerate early next year, according to survey results released today by financial analyst firm Goldman Sachs.

The survey, taken in mid-August, includes responses from a panel of 100 IT managers who have "strategic decision-making authority at multinational Fortune 1000 companies," according to analyst Laura Conigliaro and colleagues. The results, characterized as "very preliminary" by the firm, show that 2008 IT spending will likely slow down, due in part to "decelerating macroeconomic growth."

For now, it looks like "[w]eighted-average 2008 IT spending growth expectations [including salaries, operations costs, depreciation, and other costs in addition to capital outlay] are almost 100 basis points lower than 2007, while weighted-average 2008 capital spending growth expectations capital spending growth expectations are nearly 150 basis points lower," Goldman reports.

The good news, at least for storage suppliers, is that storage-related products and services are among respondents' top priorities for the next 12 months. That list includes the top 10 high priorities reported by over 20 percent of respondents:

  1. Business intelligence

  2. Server virtualization

  3. Security

  4. Application integration

  5. Server consolidation

  6. ERP software

  7. Cost cutting

  8. Business processes management/workflow software

  9. Service-oriented architecture (SOA)

  10. Business process/IT outsourcing

Storage management software, including backup, came in 12th in line among "high priorities," and the report states this represents a rise above survey results published in June 2007. Storage hardware, including disk arrays and appliances, came in 13th.Fewer than 10 percent of survey respondents view the following areas as high priorities: data center automation, IT consulting, WAN optimization, database and database management software, desktop virtualization, Microsoft Vista upgrades, LAN/network upgrades, Microsoft Office upgrades, and open source software.

At the bottom of respondents' priority list is utility/grid/on-demand computing, which no one ranked as high priority, though over 60 percent of respondents labeled the technology "medium priority."

When it comes to storage spending, respondents aren't looking to as wide a range of suppliers in storage hardware categories, hinting at tighter purse strings. Back in June 2007, Goldman's IT spending survey revealed that IBM, NetApp, HDS, Dell, and EMC -- in that order -- were gaining share of IT spending dollars among respondents. In the latest survey, only EMC and NetApp turn up as gaining share, in positions 1 and 2, respectively.

In IT software, VMware ranks first among vendors gaining spending share among respondents, with Cisco, Red Hat, Oracle, Informatica,, Microsoft, EMC (exclusive of VMware), Symantec, and Citrix ranked in order below it.

One thing the analysts note is that NAS is on the rise: "Our survey results suggest that SAN-based storage has benefited most from the initial wave of server virtualization," the report states. "Nevertheless, with the release of VMware VI3 (Virtual Infrastructure), iSCSI and NAS-based solutions are starting to show up on our radar screen. As NAS becomes a more viable alternative to SAN in virtualized environments, we expect NetApp to be the primary beneficiary."Have a comment on this story? Please click "Discuss" below. If you'd like to contact Byte and Switch's editors directly, send us a message.

  • Cisco Systems Inc. (Nasdaq: CSCO)

  • Citrix Systems Inc. (Nasdaq: CTXS)

  • Dell Inc. (Nasdaq: DELL)

  • EMC Corp. (NYSE: EMC)

  • Goldman Sachs & Co.

  • Hitachi Data Systems (HDS)

  • IBM Corp. (NYSE: IBM)

  • Informatica Corp. (Nasdaq: INFA)

  • Microsoft Corp. (Nasdaq: MSFT)

  • Network Appliance Inc. (Nasdaq: NTAP)

  • Oracle Corp. (Nasdaq: ORCL)

  • Symantec Corp. (Nasdaq: SYMC)

  • Red Hat Inc. (Nasdaq: RHAT)

  • VMware Inc.0

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