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IT Departments Pragmatic about 2010 Budgets, Resources

From Australia to Italy, from Canada to Columbia and from the U.S. to South Africa, pragmatism is the order of the day for IT departments as they struggle to stretch their 2010 budgets and resources to make much needed infrastructure upgrades in the face of a still uncertain and tight economy.
Those are the results of a new 2010 IT & Technology Trends survey which polled over 500 respondents from 18 countries worldwide on IT budget and staffing issues for the year ahead. ITIC partnered with Stratus Technologies and Sunbelt Software to poll C-level executives and IT managers. The results indicate that businesses are in a better place now than they were at the close of 2010. And there’s even a hint of cautious optimism in the air. The survey results indicate that by and large organizations of all sizes and across all verticals will maintain IT staffing levels and budgets during 2010 as they continue to implement upgrade and migration projects that began in 2009.
Nearly one-third of organizations – 31% — revealed that their IT budgets will remain the same in 2010, while 27% say their budgets will increase and an 17% minority said IT budgets will decrease in the New Year. Interestingly, 15% of respondents said their 2010 IT budgets are still not approved and 10% remain unsure of their budgets for the next 12 months.
Among respondents who indicated their budgets will increase, the largest percentage – 27% — say the increases will be modest in the four-to-six percent range. Only 3% indicated their budgets would rise by 30% or more while 50% are unsure.
And among the 17% minority of respondents who say their budgets will decrease, the cuts will be minimal or modest. Some 7% say they will decline by one-to-three percent, while another 11% say they will decline by four-to-six percent. Only 7% of the respondents indicated their firms will slash 2010 IT budgets by 21% or more; 68% said they weren’t sure how big the budget declines would be.
IT Hiring: Modest but Stable
Based on the survey responses it is apparent that IT staffing levels are stable. However, it’s safe to say that very few firms would consider themselves fully staffed or even at pre-December 2007 levels, which was when the U.S. Government officially said the recession began.
And while the economy has not fully recovered, there is a sense from the survey respondents that the worst may be behind them. Over half of those polled – 52% — said their organizations will maintain current IT staffing levels for 2010. In a sign that business is improving, 25% of those polled say their organizations will hire additional IT staff as needed in the coming 12 months. Only a very small 2% minority say their firms are planning layoffs. Another 14% of respondents, say their organizations have made no decisions on hiring and are taking a wait and see approach.
Current IT staffing levels: Surprisingly just over one-quarter — 26% — of survey respondents indicated their IT departments are smaller now than they were in 2008. The biggest percentage – 42% — responded “No” while another 32% say their IT staffing levels are about the same as they were a year ago.
The anecdotal responses from around the globe all shared a common thread: pragmatism and a desire to do what it takes to weather the ongoing economic downturn. The uncertainty of the economy and how to Many respondents voiced concern about staying on top of crucial issues like security, disaster recovery and finding the funds to make the necessary desktop and server hardware, software and application upgrades.
But once again, pragmatism seems to be the byword. Many of the survey respondents simply said they’re picking up the slack and working harder and longer hours. It’s also apparent that some vertical markets have been hit harder by the recession than others. Government agencies, state and local municipalities have suffered. Likewise, the automotive industry and smaller hospitals and consulting firms have also been hit hard over the past 18 months.
An IT manager at a small government agency noted that a large part of their budget comes from state and federal grants. “Those sources are about dry in this economy. We took a 65% cut in state funding this year and pray that we can maintain that low level in next year’s state budget rather than take another cut,” he said.
An IT manager at a mid-sized U.S. consulting firm said his organization is just trying to weather the severe downturn. “Our existing clients have cut back on spending and only do what is absolutely necessary to keep their systems running. New clients are much more difficult to cultivate, so survival over this period is the top priority,” he observed.
“Our main goal is to keep the infrastructure updated, supported and available with less staff,” said an IT manager at a mid-sized healthcare firm with one thousand users.
No one is sure when the economy will rebound to pre-2007 levels. Meanwhile, IT departments are doing the only thing they can do: endure. The silver lining in the cloud is that most organizations have adapted to the belt tightening and working longer hours and have somehow generally managed to keep the corporate data centers up and running. It may not be comfortable or optimal but it’s working.

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ITIC 2009-2010 Global Virtualization Deployment Trends Survey Results

ITIC Reports & Surveys / By Laura DiDio

Server virtualization demand and deployments are strong and will remain so for the remainder of 2009 and through 2010, despite the ongoing economic downturn.

The results of the new, independent ITIC 2009 Global Server Virtualization Survey, which polled more than 700 corporations worldwide during May/June and August, reveal that server virtualization deployments have remained strong throughout the ongoing 2009 economic downturn. It also shows that the three market leaders Citrix, Microsoft and VMware, are consolidating their positions even as the virtualization arena itself consolidates through mergers, acquisitions and partnerships.

Microsoft in particular has made big year-over-year gains in deployments and market share. Thanks to the summer release of the new Hyper-V 2.0 with live migration capabilities the Redmond, Washington software firm has substantially closed the feature/performance gap between itself and VMware’s ESX Server. The technical advances of Hyper-V combined with the excellent conditions of Microsoft’s licensing program, make the company’s virtualization products very competitive and alluring. Three out of five — 59% of the survey respondents — indicated their intent to deploy Hyper-V 2.0 within the next 12 to 18 months.

Survey responses also show a groundswell of support for application and desktop virtualization deployments. These two market segments constitute a much smaller niche of deployments and installations compared to virtualized server environments. The survey results show that application virtualization (where Microsoft is the market leader) and desktop virtualization (in which Citrix is the market leader), are both poised for significant growth in the 2010 timeframe.

Another key survey revelation was that 40% of respondents, especially businesses with 500 or more end users, said they either have or plan to install virtualization products from multiple vendors. This will place more emphasis and importance on integration, interoperability, management and third-party add-on tools to support these more complex, heterogeneous virtualization environments.

Among the other key survey highlights:

The “Big Three,” Citrix, Microsoft and VMware, are bolstering their positions with a slew of new offerings and a plethora of partnerships due out in the 2009 summer and fall.
Partnerships and Alliances: The alliance between Citrix and Microsoft remains robust as these two firms believe that there’s strength in numbers, as they mount a challenge to server virtualization leader VMware’s continuing dominance.
Microsoft Hyper-V Closes the Gap: Microsoft made big year-over-year market share gains from 2008 to 2009. The survey data shows current Hyper-V usage at 32%; but 59% plan to adopt in next 12 to 18 months.
VMware remains the market leader in server virtualization with approximately 50% share among enterprise users; Microsoft follows with 26% share.
Microsoft is the current market leader in application virtualization with a 15% share; followed by Citrix with 11% and VMware with 7%. However, nearly two-thirds of businesses have not yet deployed application virtualization.
Citrix is the market leader in desktop virtualization with a 19% market share followed by Microsoft with 15% and VMware with 8%. But again, over 60% of corporations have not yet begun to virtualize their desktop environments.
Mergers and Acquisitions Raise Questions: There is confusion among the legacy Sun and Virtual Iron users as to what will happen to both the product lines and technical support in the wake of both firms’ acquisition by Oracle.
Apple Mac is a popular virtualization platform; nearly 30% of respondents said they use Mac hardware in conjunction with Windows operating systems to virtualize their server and desktop environments.
Parallels and VMware Fusion are the two leading Mac virtualization vendors with a near 50/50 split market share.
Time to Bargain: Despite budget cuts and reduced resources only a very small percentage of companies — 7% — have attempted to renegotiate their virtualization licensing contracts to get lower prices and better deals.
Server Virtualization Lowers TCO: Almost 50% of survey respondents reported that server virtualization lets them lower their total cost of ownership (TCO) and achieve faster return on investment (ROI); however, only 25% of businesses could quantify the actual monetary cost savings
Users Prefer Terra Firma Virtualization to Cloud: Users are moving slowly with respect to public cloud computing migrations, which are heavily dependent on virtualization technology. To date, only 14% of survey respondents said they will move their data to a virtualized public cloud within the next six-to-12 months.

This survey identifies the trends that propel or impede server, application and desktop virtualization deployments and to elucidate the timeframes in which corporations plan to virtualize their environments. ITIC advises all businesses, irrespective of size or vertical market to conduct due diligence to determine which virtualization solution or combination of products best meets their technical and business needs in advance of any migration. And in light of the ongoing economic downturn, businesses are well advised to negotiate hard with their vendors for the best deals and to ensure that the appropriate IT managers receive the necessary training and certification to ensure a smooth, trouble-free virtualization upgrade. This will enable the business to lower TCO, accelerate ROI and minimize and mitigate risk to an acceptable level.

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Apple Gets More Entrenched in the Enterprise

ITIC Reports & Surveys / By Laura DiDio

Apple Macintosh Enterprise Usage Continues to Grow

Apple Mac and OS X 10.x continue to make inroads in the enterprise.

ITIC’s 2009 Global IT and Technology Trends Survey shows that corporate enterprises continue to embrace the Apple Mac and OS X 10.x server operating system in numbers not seen since the late 1980s. ITIC polled IT managers and C-level executives at 700 corporations worldwide. Among the survey highlights:

Over two-thirds of the 700 survey respondents – 68% — indicated they are likely to allow their end users to deploy Macs as their corporate enterprise desktops in the next 12 months.
Almost one-quarter or 23% have a significant number of Macintoshes (> 50) present in their organizations. Apple Macs have long been a favorite of company executives, but the survey responses clearly indicate that Mac usage has filtered down to rank and file knowledge workers across the enterprise.
Half of all the survey respondents – 50% — said they plan to increase integration with existing Apple consumer products such as the iPhone to allow users to access corporate Email and other applications. This augurs well for the iPhone to establish itself as a viable alternative to Research In Motion’s (RIM) as a mobile device that allows users to access Email and other collaboration applications.

In summary, the ITIC/Sunbelt survey responses show that businesses will find themselves challenged to do more with fewer resources. The respondents also exhibited their practicality and resourcefulness in extending the lifespan of still-useful technologies like Windows XP. However those who have the need and the budget, will get an able assist from emerging technologies like virtualization – and for those that correctly configure and deploy them – Vista and the Mac and OS X 10.x

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Apple Shines

Laura's Insights ITIC Blog / By Laura DiDio

Apple rang in 2009 by celebrating a trio of milestones that were impressive by any standards including those of a company whose 32-year span has been filled with a cornucopia of noteworthy events. In quick succession, Apple posted the best financial results in its history: during the just ended 2009 first fiscal quarter it achieved record revenues of nearly $10.2 billion on record net quarterly profits of $1.61 billion and it sold an astounding 22.7 million iPods, another record. The icing on the cake: Apple’s flagship Mac computer celebrated its 25th birthday amidst the news that the Cupertino, California firm’s latest Mac Book and Mac Book Pro notebooks contributed to the overall financial bonanza with sales of 2.5 million units; a 34% gain in year-over-year unit shipments.

These feats would be extraordinary at any time but they offered even more cause for celebration due to their arrival during a week in which the news from almost all of Apple’s high-tech vendor counterparts ranged from disappointing to dismal to downright dire. Intel said it would shed up to 6,000 workers and close five manufacturing plants; Microsoft announced it will lay off 5,000 workers (the first such major action in its history) amidst declining demand for Windows PC solutions, and even the goliath Google saw a sharp decline in its 2009 first fiscal quarter profits.

With such a bountiful harvest, it was more than a little perplexing to read the headline in the January 22 issue of Silicon Valley.com column proclaiming: “Mac’s influence could wane.” Granted, the headline was a bit misleading. The article itself stated that things look good for Apple and its Macs in the near term, but what about the next 25 years? Good question.

Long term forecasts of even five years are more art or guesswork than science. But decades long prognostications are rarities unless you’re talking about Nostradamus or the Oracle of Delphi. So we’re left to forecast with the tools at our disposal – in this case, the facts. So here for your consideration is our Top 10 List concerning Apple’s health and well-being. It includes some little known facts of both a positive and even potentially negative nature.

10. Big Mac sales shrink. Apple Mac desktop sales dipped slightly even as sales of its notebooks and the lightweight Apple Mac Book Air soared. This is hardly surprising. Both the American and global consumers and workforces are becoming increasingly mobile, transitioning into an era of ever-more powerful notebooks, Netbooks (or minis) and PDAs. Critics argue that the commoditization of PC hardware will make it difficult for Apple or any hardware vendor to distinguish itself. As a result, Apple desktop sales may continue to contract along with those of PCs although they won’t become obsolete for many years. Meanwhile, Apple has a wide array of Mac Book, Mac Book Pro and the Mac Book Air products to take up the slack. The company also wisely cut hardware and OS X 10.x operating system prices to be more competitive with PCs.

9. iPod and iPhone. Apple sold a record 22.7 million iPods during the quarter, and the device has approximately 70% market share in the U.S. Worldwide market share percentages vary by country from 70% in Western Europe and Australia to well over 60% in Japan and over 50% in Canada. At the same time, iPhone sales in Q1 were 4.36 units million, representing 88% unit growth over the year-ago quarter. At some point, iPod and iPhone sales may reach saturation but that won’t happen anytime soon and when it does, Apple will most likely have another device in the offing.

8. Up, up and away. Data is no longer tied to the PC or desktop, it is moving to the cloud. Apple is right there in the cloud. Cloud computing is the new buzz word for delivering applications as services via the Internet. The first fruits of Apple’s cloud computing initiative involves the integration of Google’s cloud computing offering, the Google App Engine with Apple’s iPhone mobile computing platform. ITIC anticipates Apple will expand its reach into the cloud, again based on customer demand. Nearly half – 49% of the ITIC/Sunbelt Software survey respondents said they plan to increase integration between existing Apple consumer products like the iPhone to allow corporate users to access corporate Email and other applications over the next 12 months.

7. Marketing. No one does it better. From the moment that Steve Jobs stepped onstage 25 years ago and unveiled his 20lb. baby, to the creative licensing of the Rolling Stones tune “Like a Rainbow”, to partnering with the Irish rock group U2 to help promote iPod usage, Apple’s marketing has always been stellar. Apple uses every available channel – from the airwaves to the street – to promote its brand. There are now 251 Apple retail stores open in 10 countries, with total quarterly traffic of 46.7 million visitors.

6. New gadgets. Users and industry watchers have grown accustomed to Apple debuting revolutionary new products at MacWorld and they disappointed when it doesn’t happen. It is unrealistic to expect that any company, even one as inventive as Apple, can deliver a iPod or iPhone every year. Meanwhile, users will have to “settle” for evolutionary innovations like new laptop batteries that will run for eight hours without re-charging and Time Capsule, an all-in-one 802.11n wireless backup router that includes up to 1 terabyte of disk storage.

5. Leadership. It’s impossible to overstate or understate what company founder Steve Jobs has meant to Apple. His 1996 return to Apple sparked one of the greatest corporate revivals since Lazarus. An iconic figure in Silicon Valley for over 30 years, Jobs’ future is now clouded by health concerns, and investors and industry watchers are rightly nervous. Only time will tell when or if Jobs will return. If he does not, it will be a devastating loss on many levels but it will not cripple the company’s ability to thrive and survive. Still, Apple must allay customer, investor and government concerns by being truthful and forthcoming regarding Jobs and the company’s future.

4. What’s in Apple’s Wallet? Cash — $28.1 billion to be exact and $0 debt. That’s more than Google ($15.85B); Microsoft ($20.3B); IBM ($12.9B); Intel ($11.84B) or Sony ($6.05B). Apple also has double digit profit margins of 14.70% and operating margins of nearly 19%; return on assets is 10.77% while return on shareholders’ equity is a robust 24.47%. Few if any corporations can boast such a healthy balance sheet, which leaves Apple free to invest heavily in R&D, marketing initiatives and other efforts to keep ahead of competitors.

3. Apple is hot – and cool. Consumers have always loved Apple and there’s nothing to indicate that will change. Consumer enthusiasm for iPods and iPhones has fueled the resurgence of Macs and OS X 10.x in enterprises. Everyone it seems has or wishes they had an iPod or an iPhone. Beyond that the latest joint ITIC/Sunbelt Software data indicates that Apple is increasing its presence in many markets thanks to the performance and reliability of the core products. Eight out of 10 businesses – 82% of the survey respondents – rated the reliability of the Mac and OS X 10.x as “excellent” or “very good,” while almost 70% of those polled gave the same high marks to the security of the Apple platform. Tellingly, 68% of the survey respondents said their firms are likely to allow more users to deploy Macs as their enterprise desktops in the next six-to-12 months.

2. Enterprising. Over the past three years Apple has made a comeback in the enterprise. The latest joint ITIC/Sunbelt Software survey of 700 companies worldwide indicates that nearly 80% of businesses have Macs in their environment and 25% have significant (>30) numbers of Macs. But while enterprise users love Apple, IT managers remain divided. The biggest drawback for the Mac is the dearth of enterprise-class third party management and performance enhancement tools but technical service and support is also an issue. Apple will have to address these points if the company expects or plans to challenge Microsoft’s dominance on business desktops. So far, Apple has been silent about its enterprise strategy but a new consortium of five third party vendors calling itself the Enterprise Desktop Alliance (EDA) is determined to promote the management, integration and interoperability capabilities of the Mac in corporate environments.

1. Mobile and agile, not fragile. The combination and plethora of Apple consumer and corporate devices makes for a powerful product portfolio with widespread appeal. Unlike many of its competitors Apple is not dependent on a single product or market segment. Hence, when sales decline in one sector, the slippage is offset by another product as we’ve seen with Mac notebooks picking up the slack for Mac desktops. This enables Apple to adjust both its technology plans and market focus accordingly, strengthening and insulating the company from cyclical downturns.

One of the hallmarks of Apple’s existence has been the ability to re-invent itself – not only changing with the times – but keeping its fingers on the pulse of an often fickle public and anticipating what its users and the industry wants. Apple is well positioned for both the near and intermediate term. It will have to stay focused, keep its edge and clearly communicate its strategy in order to maintain the same level of success it has achieved in the last 32 years.

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