Economic outlook

One issue put to the panel at ARN’s recent datacentre roundtable was whether the economy was headed into recession and, if so, what impact this could have on IT spending.

Fujitsu’s Professional Systems Group eastern region manager, Perry Delaney, pointed out that every economic slowdown is preceded by an equity squeeze and that we’d just seen one of the largest in 20-30 years. While Fujitsu had posted strong results in the 12 months to March 31, 2008 and enjoyed a strong first quarter in the current financial year, he was not at all confident that these spending patterns would continue beyond September and into the new calendar year.

“Business is cautious. They’re quite optimistic that it won’t be as bad as we’re all being led to believe, but there’s a level of uncertainty and discretionary spend has been cut back a lot,” he said. “The market is still reasonably strong but next year could be a different picture all together.”

IBRS analyst, Kevin McIsaac, said it was very hard to know where the market was going to go but that organisations should have a very solid cost-reduction strategy in their top drawer.

“That way, when the CFO walks in to tell you it’s time to cut costs you can go ‘yes, here it is’,” he said. “If you’re a reseller you need to be having that conversation with your customers now. How can you help them do that?”

Despite some current nervousness, APC’s country manager, Gordon Makryllos, remains bullish.

“We’re not seeing [a slowdown] because of the issues we’ve discussed today. Some customers in certain segments have slowed down but others have filled the gap,” he said.

EMC’s A/NZ president, David Webster, said most CIOs now have a ‘Plan B’ to reduce cost if the economy really starts to slow down. Despite this, he suggested some areas of technology, and vertical markets such as resources, would see little or no impact even if the economy does go into recession.

“I don’t see data storage and virtualisation slowing down because of an economic slowdown because businesses still have to store and manage their data,” he said. “That doesn’t stop because the economy stops.”