Businesses May Cut Back Spending on Storage

As financial problems hit every part of the economy, the IT sector is coming to the realization that it isn't immune to a retrenchment in business spending. And it is beginning to look like some of those same trends may bring about a slowdown in spending on storage.

Many savvy IT managers saw the slowdown coming and increased their purchases of storage and other IT products earlier in the year. That has produced low storage utilization rates in large companies not seen since 2003, which is likely to result in "a significant decrease in storage spending for Q4," according to research firm TheInfoPro.

Large companies were "stealing from Peter to pay Paul," TIP's managing director of storage research Robert Stevenson told Byte and Switch. "Instead of spending 40 percent of their budget at the end of the year, they bought more in the first half. It looks like they're going to be spending 10 percent to 15 percent of their budget at the end of the year. As a result, the fourth quarter looks difficult in terms of storage spending."

The midmarket also faces a slowdown, but on a different scale, Stevenson said. "At midsized companies, the storage budget isn't as much of an entitlement and they will cut the budget if they have to," he said. "They may only have a 25 percent increase instead of a 40 percent increase in storage spending."

After interviewing IT decision makers at 250 firms, including 140 at Fortune 1,000 enterprises and more than 100 midsized companies in the U.S. and Europe, TIP concluded: "Storage decision-makers, anticipating future risk, accelerated infrastructure upgrades to ensure they could both retain budget levels and operate in a lower-budget environment in the future." As a result, storage spending in the near term is expected to slow.