After the Christmas shopping season of 2002, the media trumpeted the worst results for retailers in 30 years. However, gross shopping receipts were the highest in recorded retail history. And although the growth rate was the lowest in 30 years, there was growth nonetheless. If you look at the numbers one way, it's disaster. Another way, and you've got the biggest Christmas shopping season on record.
Recent IT spending projections demand a closer look as well. The only certain thing about 2003 is that a big increase in overall IT spending is highly unlikely. A Goldman Sachs Group survey of CIOs at the close of 2002 shows that tech spending will decline, rather than increase by 2 or 3 percent, as some other analysts have projected. I believe the survey subtly suggests that the decline in IT spending is at least partially due to the loss of corporate faith in the transformational powers of IT, a harsh hangover from dot-com excess.
While flat spending would have obvious effects on the future of technology companies and their stock prices, it would have far less impact on the average CTO at a nonvendor company. In fact, anything within 2 or 3 percent of last year's IT budget in an era of flat revenues might just be a well-disguised tribute to CTOs and CIOs everywhere. All the money you've been promising to save with IT solutions over the past few years? Well, the investments are paying off with lower IT operating costs. Congratulations!
It doesn't hurt that every significant technological development hitting the mainstream in the past couple of years allows CTOs do more with less. Linux? A low-cost way to squeeze more performance out of all the Intel hardware you probably have sitting around the office. Web services? A means to help systems you already have communicate with one another more effectively. Grid computing? It might not be mainstream yet, but it's just a way to squeeze more cycles out of systems that are already bulging with performance due to the march of Moore's Law and the continuing maturation of Linux.
Despite major cutbacks in staff and resources, the average IT operation is moving ever closer to the absolute efficiency that software developers and systems architects have envisioned from the beginning of computing. Unfortunately for vendors, this means that IT managers don't need to spend as much money stocking the IT arsenal with the requisite weapons. Although IT is by no means easy or cheap yet, technology is getting easier and cheaper to the point where we might not need to spend more and more money each year. And isn't that what we all wanted in the first place?
Thanks to Moore's Law, the power of the IT dollar is far outstripping any modest decline in IT spending, especially with hardware. Case in point: Exactly one year ago, I placed an order for five identical Intel-based servers from a well-known vendor. Each server had a single processor, 1 GB RAM, and two 18GB disks. This year, I ordered the exact same model from the same vendor as last year, keeping the same RAM and disk configuration, but adding a second processor that was 40 percent faster than the one processor in the single CPU model from the previous year. The net result? After adding a second, faster processor to each of the newly-purchased servers, I spent 23 percent less on this year's purchase. (Had I bought six of the new servers instead of five, I would still be spending about 3 percent less than I spent last year on five.)Even in light of a modest decline in IT spending, when I can spend 23 percent less this year for more power, it starts to stack the odds in my favor.