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Story URL: http://management.silicon.com/itdirector/0,39024673,39346861,00.htm

Downturn won't mean "full stop" on tech spend
But businesses will be on the defence...

By Tim Ferguson

Published: Thursday 20 November 2008

Investment in technology will not be severely impacted by the economic downturn as companies will need to use it to help them through the recession, industry watchers predict.

Businesses now depend on technology to such an extent that it will be vital in helping businesses boost their efficiency, save money and retain customers, according to analyst house Pierre Audoin Consultants (PAC).

Speaking to silicon.com, PAC chief analyst Christophe Chalons said: "There will be some adjustments but there will be no full stop of IT investment."

While there are similarities between the current economic downturn and the dot-com crash in 2001, PAC said the current situation is more a parallel to the early 1990s when the recession drastically reduced IT spending.

In today's recession though, businesses depend much more on technology, meaning the reduction in tech investment is likely to be less severe.

"It is clear that companies are investing in IT to improve their performance which means even in a crisis situation, companies need to invest in IT," he said.

Chalons did note however that financial pressure will see companies having less money available to spend on IT, meaning investment will suffer to an extent. Big projects are a likely casualty, he noted.

"[There will be] no big bang but a lot of tuning [and] improvement of existing systems," Chalons added.

This will form part of what PAC sees as the defensive approach businesses will take to get them through the economic crisis, which will also include making the most of the existing workforce and focusing on customer retention.

Chalons said companies will probably resume a more attacking approach during 2010.