This chapter discusses the reasons and rational for the contraction in technology spending in the future and different approaches to cost savings companies will take. The contraction in technology spending is due to so many factors such as off-shoring, standardized hardware, new conservative spending patterns, open-source software, etc., and the combination of these trends makes me worry about the future of the IT industry. If these current trends continue, new trends emerge, and companies aggressively cut IT spending, will the IT industry come to an end?
The traditional view of IT spending assumes that with GDP growth of 3% or more, spending should increase by 5 or 6% per year. The author tends to disagree with this traditional view and because of the many factors mentioned in previous chapters, he assumes spending will decline. I am not sure when the author thinks this decline in spending will begin, but I was curious to see if his prediction had begun to occur yet. According to the GDP report from Moody’s, GDP increased 3.9% this quarter with real investment in equipment and software growing 6%. Therefore, the traditional view is dead on, and the author’s prediction of reduced spending has not begun. I still believe his prediction is likely to occur especially since what has happened with hardware over the last thirty years is positioned to occur with software and internal labor. Also, as the risks to the economy increased appreciably over the past few months, it may just take time for the decrease in IT investment to become apparent.
Another reason I support the author’s assumption of a decline in spending is because the next new IT thing, which has included innovations like the Web and Y2K drive IT spending to unnatural levels. However, the new IT thing now includes open-source software, free-ware, and off-shoring, which have the opposite potential to decrease IT spending to unnatural levels. The next new IT things in the past required companies to spend millions on initial costs, implementation, and maintenance, but the new IT things of today focus on saving companies millions. This will allow companies to pay less to get more out of IT.
Subscribe to:
Post Comments (Atom)
2 comments:
As time progresses and IT innovates it will becomme more and more cheaper to invest in IT. If the cost of IT is going down then the amount of money spent is going to decline as well. I feel that some companies are realizing that every feature that is offered with IT is not needed and is a way they can cut the cost. Companies are also realizing that there are so many sources that for some softwares it doesnt make sense to pay so much for just brand with they all do the same thing.
I really think that the companies need to cut their IT budget and it depends on which industry they are in. It is true as your saying that he new IT things of today focus on saving companies millions. Besides, it will bring you more profit than before you didn't spend on IT. Obviously, you have to spend a lot of money on initial cost and implementation and then you need to spend for the maintenance; consequently, these IT things can help you out when you face the current trouble.
Post a Comment