Economic Downturn Hits Storage Spending: Page 2 of 3

The economy isn't the only reason companies are pulling back on storage spending, despite the continuing need to store more data for longer periods of time, Male said. A combination of aggressive buying of storage capacity earlier in the year and better use of lower cost technology for tiered storage systems has created excess capacity at many companies, which is offsetting the historic fourth-quarter trend of spending any money left in the IT budget and buying a lot of storage as the year ends.

"A lot of IT organizations had gotten used to making big purchases at the end of the year -- we call it a 'budget flush' -- just in case the money isn't available in the first quarter of the next year," Male said. "We're not seeing a lot of that compared to previous years. As you would expect, there is a lot of belt tightening and not as much new development and new applications that would require new storage capacity."

IT managers also foresaw the credit crunch and the economic downturn coming and bought a lot of capacity at the end of 2007 and at the start of 2008. "They probably overbought and now are saying 'I can live with what I have' as the company mandates cutbacks," he said.

A third factor is that storage managers are more sophisticated and making smarter buying decisions, Male said. "They've gotten much better at buying different tiers of storage and not treating all data equally," he said. "They're not storing everything on a Fibre Channel SAN. They're using high-density drives with a lot of capacity and other lower cost technologies."

Male said the survey indicated that some companies are starting to try to reclaim unused and over-provisioned storage and deploy storage virtualization systems to increase utilization rates, but that progress has been slow compared to the adoption of server virtualization. He expects that pace to pick up in the coming years.