Europe IT spending set for 2011 growth

Asian budgets leap like tigers

By Timothy Prickett Morgan • Get more from this author
Posted in Financial News, 20th November 2010 00:11 GMT

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A few weeks ago, the wizards at Gartner put out their prognostications for global IT spending
for this year and next, and now they are rubbing their crystal balls to polish them to get a
better sense of what will happen in particular markets in 2011. The good news is that IT
budgets are expected to grow in EMEA after two years of declines. And not surprisingly,
Asia/Pacific region, which missed a beat or two during the Great Recession, is expected to
grow IT spending as the booms continue in China, India, and other countries in that part of
the world.

As El Reg previously reported, Gartner reckons that IT spending is on track to hit $2.4 trillion
in 2010, up 2.4 per cent compared to last year, with spending rising another 3.1 per cent in
2011 to kiss $2.5 trillion. Gartner warned that between 2010 and 2014, the IT racket would
exhibit "timid and at times lackluster growth," with global IT expenditures reaching only $2.8
trillion by 2014.

Europe, the Middle East, and Africa, as a group, will be pulling down the global class
average, but at least starting next year are going to be heading into positive territory for the
first time in two years, by Gartner's math. Peter Sondergaard, senior vice president and
global head of research at the IT analyst firm, said that IT spending (including hardware,
software, services, and telecom) would fall by 2.1 per cent in 2010, to $784.8bn, but that with
several key countries on the mend and despite woes in Greece, Ireland, Italy, Spain, and
Portugal, the EMEA region will show a 1.3 per cent increase in 2011, hitting $795.2bn in
sales.
Gartner is projecting that Western Europe will be hit the hardest in 2010, with IT revenues
declining 3.3 per cent as measured in US dollars and will only have a compound annual
growth rate of eight-tenths of a per cent from 2010 through 2014 inclusive.

The big culprit in the EMEA IT spending slump this year are local and national governments,
which cut back spending by 2.8 per cent to $139.6bn (this includes all kinds of IT
expenditures). IT services in EMEA will be hit even harder this year, declining by 5.6 per
cent, to $234bn, but hardware spending was up 4.6 per cent to $79.4bn because companies
can make good economic arguments to replace systems and networks that are three, four,
or five years out of date.

IT spending in the Asia/Pacific region was actually down by 1.3 per cent in 2009, to
$262.4bn, and is projected to rocket back up by 10.6 per cent to $290.2bn in 2010. Growth in
the AP region is expected to cool a bit in 2011, rising only 7.6 per cent, to $312.6bn.

"Next year we see a slowing trend in Asian growth, but one that is unlikely to develop into
something more problematic, and some countries, such as India and China, show no signs
of slowing down," explained Sondergaard in a statement accompanying the projections.
"After some impact of the global financial crisis in 2009, growth in manufacturing and supply
chain industries in China and India has picked up again in 2010."

Australia, which did not have the same economic woes as the United States and Europe,
took a 5.3 per cent IT spending hit in 2009 to $44.8bn. Like the AP region overall, Australia is
expected to grow back through its 2008 decline, rising 10.8 per cent to $49.6bn in 2010, but
cooling considerably more than its peers in China and India thereafter. Gartner expects IT
spending in Australia to rise by only 2 per cent in 2011, hitting $50.6bn.

Gartner has not yet announced its breakdown of IT spending projections for North America
or the United States, but did offer this gem: By 2012, the Gartner whitebeards expect that
hardware spending across the Asia/Pacific region will be larger, in absolute dollars, than
spending in North America. ®

Global IT spending will rise by IDC

IT spending has shown some hefty recovery after the economic travails of previous years.
According to research from IDC, global sales of software and hardware have recovered
from the low point of the recession and, consequently, the analysis company has revised
its spending forecasts for the year.

According to the research, services expenditure is set to rise two per cent, software
spending by four per cent and hardware spending by a whopping 11 per cent. IDC is
projecting an overall increase in expenditure of six per cent.

The biggest increase in the developed economies is expected to be in the US, with a
projected growth in expenditure of five per cent, a turnaround from the four per cent fall
in 2009. The US rise is dwarfed by the growth in markets like China which is expected to
grow by 21 per cent this year – ahead of performers such as Russia and Brazil with 17 per
cent and 14 per cent respectively.
"The first half of 2010 was robust by any standards for the IT industry," said Stephen
Minton, vice president of Worldwide IT Markets and Strategies at IDC. "PC shipments
were strong, enterprise spending began to recover from the depths of the recession, and
consumers remained enthusiastic about new devices such as smartphones.

However, it's not all rosy on the horizon. IDC analysts are still cautious about the
possibility of a double-dip recession. "Amidst the general sense of optimism that has
accompanied results from the first half of this year, there are also reasons to be wary of
excessive exuberance," said Minton. "Our surveys indicate that businesses are still
cautious about committing to new, long-term IT projects, and are still anxious about the
possibility of a double-dip recession. Decision-making cycles remain long, and many
enterprises have contingency plans in place for the next 12 months which could see more
projects suspended."

Gartner revises 2010 IT spending upwards

Crashing dollar cranks up optimism
By Timothy Prickett Morgan • Get more from this author
Posted in PCs & Chips, 13th April 2010 07:58 GMT

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Last week it was the prognosticators at Forrester Research who upped their projections for
IT spending a teensy bit, calling the end of the tech downturn and the beginning of a tech
recovery. This week, the wizards at Gartner are peering into their crystal balls and see a
slightly brighter IT picture for this year, too.

Gartner's latest projections call for global IT spending, including a vast amount of telecom
services, to grow by 5.3 per cent to $3.39 trillion. Gartner was feeling so confident about the
improving global economy - and the crashing US dollar that makes a lot of hard and soft
wares less expensive overseas, where the real growth is - than they might otherwise be, that
it even went so far as to say that IT spending globally would grow by another 4.2 per cent in
2011, to hit $3.5 trillion.
Only three months ago, Gartner was estimating that 2010 IT sales would rise by 4.6 per cent
to $3.36 trillion.

Booking IT sales overseas and then bringing them back home in dollars means that a little
growth at home in America plus a little growth overseas can add up to what feels like a better
number. But Gartner nonetheless threw a little cold water on its own enthusiasm by
reminding everyone of the currency effects in its forecasts.

"Following strong fourth quarter sales, an unseasonably robust hardware supply chain in the
first quarter of 2010, combined with continued improvement in the global economy, sets up
2010 for solid IT spending growth," explained Richard Gordon, research vice president at
Gartner, in a statement accompanying the projections. "However, it's important to note that
nearly 4 percentage points of this growth will be the result of a projected decline in the value
of the dollar relative to last year. IT spending in exchange-rate-adjusted dollars will still grow
1.6 per cent this year, after declining 1.4 per cent in 2009."

Along with the revision for expected IT spending in 2010, Gartner also tweaked its spending
estimates for 2009. The company believes that spending on computer hardware fell by 12.5
per cent, to $333bn - not as bad as previously thought, thanks to a good final quarter for
servers, PCs and storage. Software spending fell by 2.1 per cent to $221bn, and IT services
fell by four per cent to $777bn. Telecom services and products accounted for $1.9 trillion,
down 3.4 per cent last year, leaving overall IT spending for 2009 at $3.22 trillion, down 4.5
per cent.

Looking ahead to 2010, Gartner believes that spending on computer hardware will rise by
5.7 per cent, to $353bn, considerably better than the 1.6 per cent growth it was predicting
back in January for this year. Software spending is expected to increase by 5.1 per cent, just
a smidgen better than the January prediction, to $232bn, while IT services is forecast to hit
$821bn, a little less than the January estimates for 2010 spending but up right along with
hardware at 5.7 per cent growth. Telecom spending will go up by 5.1 per cent, to just under
$2 trillion in 2010.
Gartner says that customers still have a "recession hangover," and are looking for small,
quick deals they can do to cut overall costs, whether the deal involves hardware, software, or
services - or a mix of all three

Introduction

Verdict Research: UK Retail Futures 2011: Food and Grocery combines comprehensive insight into a host
of economic, social and political factors with market-centric factors such as inflation/deflation, channel
activity and shifting consumer preferences. It includes comprehensive coverage of the issues, prospects and
challenges facing participants in the sector over the next five years.

Scope of this research

• Food & grocery market expenditure, inflation and volume growth annual forecasts to 2011 and ten
year historic data series.
• Comprehensive analysis covering inflation, volume and sales growth for 15 food and grocery sub
categories.
• Channels of distribution analysis 2005, 2006 and 2011 covering grocers, food specialists,
tobacconists, off-licences and grocers' non-food sales.
• Comprehensive analysis of issues affecting the market including premiumisation in food, non-food
development, environmental issues and healthy eating.

Research and analysis highlights

The food & grocery market experienced its fastest growth for three years in 2006. A combination of
inflationary pressures (owing to a spate of poor harvests and higher farm gate prices) and a consumer
preference towards trading up to more premium products enabled the sector to post growth of 3.2%.

By 2011 we expect sales of non-food to grow to account for almost £1 in every £5 spent at grocers. The
successful execution of more structured range architectures, improved non-food store environments,
broader non-food offers online and enhanced service will be crucial in enabling grocers to maximise their
non-food sales opportunities.

Space growth will remain strong. We forecast 5.1% space growth among food & grocery specialists over the
next five years, just 0.2 percentage points less than in 2001-2006. Superstore development will be the key
driver of this increase a direct consequence of the major players' strengthened involvement in non-food.

Key reasons to purchase this research

• Plan for the future use this report to develop strategies that will enable you to compete effectively
against rivals in changing market conditions.
• Enhance your understanding of key issues, trends and dynamics in the market to allocate
investment profitably.
• Detailed category forecasts allow you to quantify opportunities in fast growing categories and avoid
over-investment in weaker segments.

KPMG exec talks 2010-2011 retail industry trends

By Kathy Mance, NRF Foundation Executive Director | Published: October 5, 2010
Be the first to comment | This entry was posted in NRF Foundation, Retail Trends

NRF’s annual State of the Industry survey, Retail Horizons: Benchmarks 2010- Forecasts
2011, is every U.S. retailer’s opportunity to benchmark their company against peers and other
retail companies in nine functional areas. The ninth survey, conducted by the NRF Foundation
with support from survey partner KPMG, is in the field through October 15 and once again this
year is expected to yield timely and possibly surprising insights on retail leaders’ planning in
light of current conditions and issues. In advance of the survey results, which will be released
in January, I asked Mark Larson, Partner, KPMG U.S. and Global Retail Industry Leader, to
share what he sees facing retailers today and how he thinks these developments will impact
retailers in 2011 and beyond.

What do you think are some potential game-changers

in the industry?

There are certainly new economic, social and technological dynamics impacting the industry,
including the use of mobile technology. The use of mobile technology by manufacturers,
retailers, and consumers has gone up significantly over the past few years, and we fully
expect this trend to continue. Consumers have the ability to determine product availability,
make pricing comparisons, and receive product reviews all on their mobile devices.
Consequently, both manufacturers and retailers know they will need to continue to adapt. This
year’s Retail Horizons survey has been updated to include key questions related to mobile
technology as we expect this to have a long lasting impact on the industry.

How have you seen hiring trends shift throughout the course of the recession, and
when do think retailers will begin to hire again?

Since the beginning of the recession, U.S. retail has lost over a million jobs. Retail executives
are telling us that they do not feel that employment has turned around in the sector. Only a
few believe the jobs picture is better than last year, and there is a mixed reaction as to what
the job picture may look like next year. However, many retail executives have told us they
expect their company(s) to add headcount this year. It will be interesting to see what
respondents say about their hiring plans for 2011 in this year’s Retail Horizons survey,
including what functions retailers are hiring.

What do you think are some of the most daunting challenges retail companies will
face over the next few months?

I think the majority of retail executives would agree that the biggest expected challenges for
retailers in coming months include the ability to recognize and respond to customer needs and
trends, as well as adjust to discounts driven by market competition. I believe the sector as a
whole is still challenged by continued high national unemployment and decreased consumer
confidence.

When this year’s Retail Horizons results are distributed in January, what do you
think will be some of the big takeaways?

Last year’s survey results told us that retailers prioritized store expansion and web
personalization. Along those same lines, some of the overall themes we expect to see come
out of the 2011 survey include a big emphasis on product innovations, identifying and creating
innovative merchandising strategies, and increased focus on emerging markets. I’m especially
looking forward to seeing how priorities will vary based on peer group.

How will the major change in lease accounting impact retailers’ financial
statements?

The proposed lease accounting standard will certainly have a far-reaching impact on retailers.
Recording all leases on the balance sheet will result in a significant liability that will negatively
impact ratios and could cause issues in complying with the terms of debt agreements. In
contrast to the straight-line method of recognizing lease expense on operating leases today,
use of the effective interest method under the proposed standard will result in greater expense
recognition at the front end of the lease and lesser expense at the back end. Interestingly,
operating income will be higher under the new standard because a portion of the lease
expense will be recorded as interest rather than as occupancy.

The new standard will also require significant changes to retailers’ internal controls and
information systems.

How do you see social media impacting retailers?

The number of people utilizing social media make it clear that advantage will be gained by
those retailers with understanding of social media consumers, including tactics to best to
engage them. Retailers will need to demonstrate resilience in product development and take
advantage of their highly loyal customer bases. At this stage in the game, success in social
media requires agility and the ability to incorporate fast-breaking technical developments into
business models. We have again included questions around the use of social media and
networking in this year’s Retail Horizons survey to help us continue to glean information on
retailer’s adoption to and strategies for connecting with consumers through social media.
What are your expectations for the holiday season? In what ways have consumers
changed over the last year, and which trends remain the same?

I believe there may be a small uptick in sales this holiday season, but the overall trend will
remain the same. Continued high unemployment, stagnant wages, reduced credit, and higher
savings rates will cause consumers to keep a tight hold on their wallets.

However, as social networks and mobile applications play a larger role in the shopping
process, I foresee online activity will influence in-store shopping this holiday season.
Consistent messaging between the brick and mortar stores and a retailer’s online
application(s) will be very important to ensure the consumer’s experience is positive.

Why should a retailer participate in the 2010 Retail Horizons Survey?

Quite simply, to get more clarity on how you stack up against other retailers, both in terms of
historical performance and future plans. One of the most common questions I get when I visit
retail executives is some variation of “how are other retailers performing in this area?” or “how
are other retailers planning to address this issue?” Participating in Retail Horizons can help
answer these questions.

Unlike other industry surveys, Retail Horizons provides a detailed overview of this dynamic
and challenging industry, providing benchmarks and forecasts. Participating retailers will
benefit from getting exclusive information once the report is released at NRF’s BIG Show, as
well as a “sneak peek” at key metrics months in advance of this release. This information is
invaluable to retailers for planning as they gain an understanding of the current state of the
industry and the plans for the year ahead as communicated by their peers.

In 2009, retailers were forced to rethink their strategic priorities because of changing market
conditions and decreased consumer demand. Based on last year’s survey responses, retailers
overwhelmingly cited cost reduction as a top priority in store and field operations, human
capital, marketing and advertising, and merchandising and IT. I will be curious to see what
tactical decisions and strategies retail companies will implement as the industry continues to
recover. I invite all domestic retailers to visit www.nrf.com/retailhorizons and complete the
survey. KPMG and NRF Foundation look forward to providing a succinct analysis of the findings
once again.

Crystal ball sees tepid IT growth to 2014

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We're not gonna party like it's 1999
By Timothy Prickett Morgan • Get more from this author
Posted in Servers, 1st November 2010 02:18 GMT

Free whitepaper – Web Threats 2010: The Risks Ramp Up

If you were expecting the IT market to suddenly start expanding again like it was 1999, you
are in for a splash of cold water in the face to wake you from that dream.

According to the prognosticators at Gartner, IT spending is on track to hit $2.4 trillion in 2010,
up 2.4 per cent compared to last year. This may not sound like a lot, but the IT industry is
very large (especially when you toss in telecom costs, as this data does, alongside
hardware, software, and services spending) and like a large body of water, it takes a long
time to change its temperature even a little. There was definitely some ice on the hardware
surface of the IT market in late 2008 and early 2009, but this has largely thawed.

However, Peter Sondergaard, a senior vice president at Gartner and global head of
research, told attendees at the Gartner Symposium/ITxpo recently not to expect a lot of
growth. The latest projections are for global IT spending to rise 3.1 per cent in 2011, kissing
2.5 trillion, but Sondergaard cautioned that the next five years will be characterized by "timid
and at times lackluster growth," with global IT expenditures reaching only $2.8 trillion by
2014.

"Several key vertical industries, such as manufacturing and financial services, will not see IT
budgets recover to pre-2008 levels before 2012 or 2013," Sondergaard warned. "Emerging
economies continue to be the locomotive of enterprise IT spending, substantially outpacing
developed economies."

If you want to be where the action is, then it is out there in the cloud and doing social
computing. Probably things that many of you are allergic to or, more likely, you can't envision
your company getting involved in at this point given your long history in doing IT your own
way.

"The rigid business processes which dominate enterprise organizational architectures today
are well suited for routine, predictable business activities," Sondergaard said. "But they are
poorly suited to support people whose jobs require discovery, interpretation, negotiation, and
complex decision making. Social computing - not Facebook, or Twitter, or LinkedIn, but the
technologies and principals behind them - will be implemented across and between all
organizations, it will unleash yet to be realized productivity growth, it will contribute to
economic growth."
Either that or it will end up being a colossal waste of time, as the Internet sure was for the
first decade or so at many companies. Come on, admit how much time your company
wasted on Internet development and how much time employees waste staring at their
screens, looking like they are doing work. In the end, for lots of us out there who work for the
Internet - notice how I did not say on it? - we have had to learn to avoid distractions and
actually do our work.

In many cases, the Internet and the interconnections up and down the supply chain and
between companies and customers have meant fewer people actually got to keep their jobs.
That is real change and, of course, that is a far cry from making your company (instead of
Google or Facebook or Amazon or eBay) some money with new social technologies. It may
be that, in the end, what happens is much less attractive and a massive consolidation of
computing power and business intelligence about everything we do ends up in very few
hands and is largely beyond our control.

If you want to see some of Sondergaard's presentation at the Gartner Symposium/ITxpo, you
can check it out on YouTube