Call Them Unpredictable
Hardware spending fared similarly last year in organizations of both sizes. A little more than a third of midrange and large organizations spent more on servers than they expected, while more than a fifth spent less. The overspenders and underspenders canceled each other out somewhat in the averages, making server spending look close to budget overall. However, this level of unpredictability--with well over half the organizations being either above or below budget--was higher in servers than in any other budget area.
Such unpredictability occurs whenever a new technological development causes a quick shift in established practice. In the case of servers, the recession happened to coincide with the availability of new utilization technologies, creating new ways to organize and employ servers. Organizations that adjusted late to this infrastructure model found that their server budgets were unnecessarily large.
The same phenomenon happened in large enterprises with client systems and the client-based productivity applications that are so frequently tied to new client deployments. In both cases, nearly as many large organizations were under budget as were over, as needs changed rapidly with a swiftly shrinking workforce, and companies adjusted unevenly.
In midrange organizations, wireless networking was the next most unpredictable technology in 2009 (after servers), as a quarter of these firms overspent and nearly as many underspent. In this case, it seems likely that companies that went over budget had not anticipated the growing demand for wireless earlier. We saw the inverse case with servers and client systems, where the companies that spent below budget had actually not anticipated the lack of demand for these systems.
Once we look at what's going on this year, we can understand how exceptional 2009 was. Many trends from last year seem to be disappearing rapidly in 2010--including these sharp differences we've been noting between midrange and large companies.
As expected, organizations in both categories share top budget growth in virtualization: an average of 16 percent higher in 2010 for large enterprises and a whopping 25 percent for midrange firms. But storage--particularly storage-area networks (SANs) and back-up hardware--also figure significantly in 2010 plans on both sides, with
15 percent SAN budget growth expected in large companies and 17 percent in midrange firms.
Another similarity between different size organizations now that the economic crisis is past is that both are strongly renewing their spending in servers. Tellingly, 2009's unpredictability in server spending has vanished in this year's budgeting. So while server spending was flat on average last year because many firms unexpectedly spent less than their budgets, it looks very much as though those firms are now back and ready to buy again.
Lastly, midrange and large enterprises are cutting back somewhat similarly in 2010, especially in printer purchases. This is one of a few examples of how quite different investment patterns during the recession are fading now in a recovery. Large enterprises spent an average of 3.8 percent less on printers than budgeted in 2009, while midrange firms were more or less on budget. This year, though, both groups expect to reduce spending significantly.
Even though midrange and large companies are becoming more comparable in their 2010 IT plans, there remain the usual differences in the kinds of technologies that appeal, and in the length and form of the purchase process. But this year looks nothing like the split experienced in 2009.
For a midrange firm looking to take advantage of current growth opportunities and perhaps become a large one, acting--technologically speaking--like a bigger competitor looks like a smart strategy. And large enterprises have a similar chance to emulate their smaller brethren and find ways to be more nimble and focused.
Guy Currier is executive director of research at Ziff Davis Enterprise.