Goldman Sachs Predicts IT Spending Downturn, Virtualization Uprise

Goldman Sachs predicts IT spending will slip from 7 % growth to 5 % growth in 2008. Not a downturn of catastrophic proportions, but still bad news for the industry. On the upside, server virtualization and server consolidation were ranked No. 1 and No. 2, respectively, in terms of spending priorities for this and next year. No. 3 was cost-cutting in general, followed by grid computing and on-demand computing finishing the priorities list.

Expectations of budget growth remain down significantly on a year-over-year basis, with many CIOs limiting their purchases to projects with a high and fast ROI. We continue to believe that 2008 IT spending will decelerate to 5 percent from 7 percent in 2007….Demand for discretionary IT projects dropped to its lowest point in the history of our survey, with caution beginning to spread to the offshore providers. CIOs have emphasized to us that they are buying on a need versus want basis, are often downsizing deals to fit with current budget constraints…. In fact, contrary to general tightening in spending, purchases with an especially compelling ROI are being accelerated in the current environment.

[For more on the report, including graphics: The Open Road]

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I'm a blogger, entrepreneur, conference organizer, social media consultant, startup advisor and allround web addict, based in Belgium, Europe. I'm a writer at TechCrunch and managing editor of Virtualization.com.

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