Gartner has revised down since last quarter its estimates for worldwide IT spending in 2009, which it now expects to slide by 6%. Decline more severe than forecast just 3 months ago. In March of this year, Gartner had forecast 2009 worldwide IT spending would decline by no more than 3.8%. Today the market-watchers have said spending will be running at levels which should tally $3.2 trillion by year end, down on last year’s numbers of $3.4 trillion. Continued weak IT spending because of the economic situation combined with the effect of exchange rate movements are to blame.  Hardware will experience the steepest decline in 2009, with spending projected to decline by 16.3%, software will drop 1.6%, and services will fall by 5.6% the analyst house has predicted.

So do you feel sorry for the poor IT vendors struggling to make ends meet? Or are you making the most of these tougher times and negotiating hard with cash-starved IT salesmen desperate to win any business at any cost? “Now is the time to bag yourself a bargain” according to Mark Bartrick, Managing Director of Silver Bullet Associates.

With the huge buying power wielded across the public sector, you would imagine that they always obtain the best technology, best deals and the highest discounts. So why is it that time after time, all we read about in the press is how wasteful IT spending is in the public sector? One issue is that the public sector seems to be very conservative when it comes to buying technology. As a result it often buys technology that is already going out of fashion in the private sector, or it seems to wait an age to adopt new technological advances (such as open source software) which can drive down costs and improve productivity. For example, it would be an interesting exercise to see how many million of pounds the public sector could save if it was simply to move from Microsoft Office to OpenOffice? Being risk averse can be a costly road to follow if you get stuck with out-dated legacy solutions with expensive pricing mechanisms and un-breakable multi-year commitments.

IT budgets are facing a painful overhaul in 2009 with many analysts predicting that global spending on IT products and services would drop by 3% or more this year. This would be the first annual decline since the dot com crash seven years ago. Spending priorities would seem to centre on business optimisation technologies, particularly business process improvement and business intelligence. And while reducing enterprise costs will factor in most IT plans in 2009, its also worth noting that as cash becomes scarcer, its buying power increases.  As IT suppliers scramble for a diminishing pool of money,  your negotiation power increases. At Silver Bullet Associates, we suggest that perhaps this is the year for you to review your current IT costs and tackle some of the more expensive items head-on by re-negotiating better prices or terms with your incumbent IT suppliers?