U

(By Richard Holway 4.00pm 13th Apr 09)
I was really chuffed by the comments and feedback to my IT forecasts – Holway’s rant on 2nd Apr 09. It really does appear that readers have noticed that we have got our trend-line forecasts consistently accurate – and, indeed, that others have not! However, one reader, who had attended my ‘State of the ICT Nation’ speech last Sept, had to spoil it by remarking that I hadn’t been gloomy enough – again!”

Of course, the trend-line forecast record referred to goes back two decades. But it is the last 18 months that are the most topical. The timeline is like this.

August 2007 – I was first made aware of the financial problems the global economy was facing and started my first warnings that this was bound to affect the IT sector.

Sept – Dec 07 – My warnings fell on deaf ears.

Feb 08 – Had stand-up disagreement with Brad Holmes, VP at Forrester, at the 2008 Regent Conference. He predicted that US IT spend would be back to double digit growth in 2009 and 2010 after slipping from 6.2% in 2007 to 2.8% in 2008. I very publicly challenged both Brad, and anyone else in the audience, to a bet that double digit IT growth would NOT occur in 2009/10 and that we would actually see a decline.

Mar – June 08 – I wrote many articles about the impending downturn; even accusing our industry of ‘Living in denial’.

Sept 08 – A seismic shift occurred when executives returned from their summer holidays. They all seemed to realize at once that something pretty awful was happening. Suddenly I was not a lone voice in the SITS firmament. Most of the other forecasters started to reduce their forecasts.

Oct 08 – Mar 09 – Profit warnings proliferated. Every trading statement made mention of difficult and unpredictable times ahead.

March 09 - We were now indistinguishable from any other forecaster as the others slashed their forecasts to be more like TechMarketView. Now that’s a position I don’t like very much!

April 09 – On 5th Apr 09 I wrote Spring is in the air? Somehow sentiment had changed. There was a feeling that the banking crisis might have ended. There was a feeling that, although unemployment, bankruptcies – and most specifically a decline in SITS spend - would continue for some considerable time (another year at least), confidence had hit a low point and would now start its recovery.

Since I wrote that article, the media has been positively brimming with ‘signs of bottoming out’ stories. Indeed the decision of the BoE to hold rates at 0.5% (there really wasn’t anywhere too much lower to go was there?) has even tempted pundits to suggest higher rates soon. Certainly, if you are a saver, one year rates have already seen a welcome rise in the last week.

I think we have a classic ‘U-shaped’ economy. We have hit the low point of the U but are in for a long bottom. But confidence is increasing and I think we are over the worst. 2010 should see the return to growth.

I have often said that this downturn will create major opportunities. Get on with making the changes and ensure you are ready for the upturn. The market post 2010 will be quite different. Just surviving through to the 2010 up-tick is not enough.