IDC: IT spending to grow 6% in 2005

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December 3, 2004 (InfoWorld) -- In making its annual predictions for the upcoming year, IDC said it expects worldwide IT spending to grow 6.1% for 2005, a year that will be marked by "enormous turbulence" and significant consolidation and realignment in several key sectors.
The 6.1% growth, a slight improvement over the 5% growth rate expected for 2004, means the IT market will exceed $1 trillion in overall spending, delivering about $60 billion worth of net spending growth, according to IDC executives. The company expects, however, that growth in IT spending will continue to be moderate through 2008.
"This growth has some assumptions tied to it, namely a modest rise in the U.S. growth rate, a mild rebound in Western European countries, the continued weakness in Japan and Latin America, and continued high growth in emerging markets like Central and Eastern Europe and Asia Pacific," said Frank Gens, senior vice president of research at IDC.
In order to gain a higher growth rate, the industry will need to do a better job at three things, he said. It has to target finer-grained growth segments, deal with an overall environment that "is all about the convergence of individual and soiled market segments" and aggressively attack cost structures.
What will spur some of this higher growth will be the migration by larger IT shops toward more dynamic IT environments, those that innately offer greater efficiency and better business responsiveness. Examples of such environments are embodied in big-picture initiatives such as IBM's On-Demand and Hewlett-Packard Co.'s Adaptive Enterprise.
"This focus on a new foundation in IT, which we call dynamic IT but the vendors call on-demand or adaptive, is about the ability to apply flexible approaches based on things like SOAs [service-oriented architectures], Web services, virtualization and standard components. It is this technical foundation underneath the enterprise that will be the driver for change," Gens said.
IDC predicted that there would be a concerted quest for "business value" that will force an increasing number of infrastructure players to partner and acquire technologies and companies that can help them zoom to the upper stack of dynamic IT environments. The firm predicted that in the next year, Microsoft Corp. will "make a big move to increase its upper stack leverage."
"Microsoft understands that the leverage within the enterprise is moving up the stack and getting closer to the business process. So it needs to strengthen its position there. We won't speculate today on who they might buy, but certainly within the community of application vendors and integration platform vendors is where we believe they will target," Gens said.
As a side note Gens said he thought the most "underreported merger

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