Opinions Vary on Whether IT Spending has Bottomed Out

Tech industry leaders seem to be slightly at odds over whether IT spending has bottomed out and begun the process of recovery.  A story last week in the Wall Street Journal cited several IT leaders in organizations including Sunoco, Inc., Allstate Corp., and Notre Dame University as believing that U.S. businesses have finished cutting their IT budgets. 

Sunoco’s CIO, Peter Whatnell, reported that the company hasn’t seen any tech-spending reductions since March and that budget cuts have leveled off for now because the company doesn’t anticipate further declines in the economy.  Allstate reports that, although their $1 billion tech budget has been flat for the last year and will likely remain so into 2010, budget cuts seem to have been stemmed.  And Notre Dame’s board approved a two percent increase in the university’s IT budget even in the face of shrinking endowments and reduced giving. 

WSJ interviewed more than a dozen CIOs and corporate technology executives and concluded that many U.S. businesses have finished cutting.  This coincides with a Goldman Sachs forecast that stabilization in tech spending is beginning to occur.  This news was seen as a light at the end of the tunnel for such companies as IBM, Dell and Oracle.

However, breaking from other technology chiefs, Hewlett-Packard’s CEO, Mark Hurd, warned he hasn’t seen the tech industry emerge yet from its slump.  In another WSJ story, Hurd said that the spending climate looks the same in the current quarter as the preceding one in which H-P recorded a 17 percent profit drop and sharp declines in sales of its PCs and printers.  “I’m not ready to call it better,” he said. 

Even those most optimistic of CIOs agree that while spending may have hit bottom, IT budgets won’t be boosted again until after their businesses and the economy as a whole have shown stability for several quarters.  For 2010, tech budgets are anticipated to remain flat. 

For both stories reported in the WSJ see:

http://online.wsj.com/article/SB124225721337517263.html

http://online.wsj.com/article/SB124276534923436061.html