Last year, the technology market thrived on the declining U.S. dollar. But now that the dollar is strengthening and the global recession continues, global purchases of information technology (IT) goods and services are expected to drop.

A new report from Forrester Research, released Jan. 12, predicts a 3 percent decline to $1.66 trillion in IT spending for 2009 as companies cut back on hardware purchases such as desktops, notebooks, servers and other hardware. Enterprises are expected to decrease hardware purchases by 4 percent to $434 billion, eWeek reports.

Software purchases for storage and security, however, are expected to remain resilient. "One reason for that is that there are chunks of revenues such as maintenance and subscriptions that just keeps growing," Forrester analyst Andrew Bartels said to eWeek. "There is also some software that companies see as essential, such as security, or software that is seen as a way to save money in the long term."

In 2009, businesses are forecast to spend about $388 billion on software for security and storage. Of the 1,206 small and mid-size businesses (SMB) surveyed for a December 2008 Forrester report, 82 percent said protecting sensitive corporate data, intellectual properties and customer data to be very important business objectives.

"In this particular climate, SMBs are worried about losing customers due to a security breach, rather than concerning themselves with gaining new clients. The last thing you need is to somehow erode that trust with a big data breach," Jonathan Penn, author of Forrester's The State Of Enterprise IT Security: 2008 To 2009, explains in another eWeek article. "...Focusing on what's important, the data, is exactly the right way to go."

According to Forrester, security is getting a bigger piece of the IT budget with SMBs planning to increase their IT security budgets to 10.1 percent while budgeting 15.9 percent for new security initiatives. The survey also notes that 20 percent of the SMBs questioned said they are committed to piloting or adopting more e-mail encryption, network storage encryption and data leak prevention in the next 12 months.

Along with security, other types of IT vendors are making a case for technology, saying it provides ways to cut costs. Tony Lourakis, head of a software company that develops tracking devices, tells the Financial Post that Complete Innovations' type of technology helps businesses track their vehicles, assets and workers, which lets them be more efficient and thus reduce costs.

"In times like these, you have to do things today that will give you a good return now," Lourakis adds, noting that his company's sales are "way up."

According to market research firm IDC, only 53 percent of small businesses viewed technology investment as a priority while 80 percent of medium to large companies considered it a priority, which Dan Goldberg, vice-president of small business at Telus, tells the Financial Post needs to change.

"Now is the time to put technology to work — particularly for businesses in survival mode," he says. "Those companies will face tough times as credit tightens. They are looking for predictability in their costs, so they know what to expect in terms of cash outflows from month to month. Technology can help them do that."

Eric Gales, vice president of Small Business and Midmarket Solutions & Partners at Microsoft Canada, advises that companies break technology down into components and look at what the most appropriate technology is for them. Based on analysts' predictions, however, it seems uncertain whether companies will tap into technology this year. Like Forrester, IDC predicted a slower 2009 saying global IT spending would grow only 2.6 percent, down from its previous forecast of 5.9 percent, MarketWatch reports.

Forrester doesn't expect the technology market to bounce back until 2010, when IT spending is predicted to increase about 9 percent.

Resources

Global IT Market Outlook: 2009
by Andrew Bartels, Ellen Daley and Madiha Ashour
Forrester Research, Jan. 12, 2009

The State Of Enterprise IT Security: 2008 To 2009
by Jonathan Penn, Heidi Lo, Ellen Daley, Madiha Ashour and Chétina Muteba
Forrester Research, Dec. 24, 2008

Forrester Research Sees IT Spending Declining in 2009
by Scott Ferguson
eWeek, Jan. 13, 2008

SMBs to Increase Security Spending in 2009
by Nathan Eddy
eWeek, Jan. 7, 2009

Tech Spending Helps Cut Costs
by Mary Teresa Bitti
Financial Post, Jan. 16, 2009

Tech Industry Tightening Its Belt for New Year
by Jeffry Bartash and Dan Gallagher
MarketWatch, Jan. 18, 2008