Gartner Integrated ITSpending PerspectivesBuilding Your Budget for 2010Barbara Gomolski & Kurt Potter11 November 20099 December 2009This presentation, including any supporting materials, is owned by Gartner, Inc. and/or its affiliates and is for the sole use of the intended Gartneraudience or other authorized recipients. This presentation may contain information that is confidential, proprietary or otherwise legally protected,and it may not be further copied, distributed or publicly displayed without the express written permission of Gartner, Inc. or its affiliates. 2009 Gartner, Inc. and/or its affiliates. All rights reserved.11/11/2009_11/11/2009Welcome!Heres how to participate in todays webinar You can listen to the presentation usingyour computers speaker system as thedefault (VoIP). Or dial the conference line by selectingUse Telephone in the webinar audiopane. Have a question for the presenter(s)?Type it into the Questions panewe willanswer as many as time permits. A recording of this presentation will besent to you within 48 hours. If you would like a copy of todayspresentation, contact your GartnerAccount Executive or e-mail us at:GartnerWebinarsgartner.com. 2009 Gartner, Inc. and/or its affiliates. All rights reserved.Gartner is a registered trademark of Gartner, Inc. or its affiliates. 2 Please note you may be polled during3Our world-class, objective insight is drawnfrom thousands of daily client interactions5,500Benchmarks60,000Clients10,000ClientEnterprises100,000IT End-UserInquiries65% ofFortune 1000;85% ofGlobal 5002 Million+IT End-UserSearches60+Conferences3,700CIOs10,000MediaInquiries650 AnalystsAcross 80Countries 2009 Gartner, Inc. and/or its affiliates. All rights reserved.Gartner is a registered trademark of Gartner, Inc. or its affiliates._11/11/2009Gartner Integrated ITSpending PerspectivesBuilding Your Budget for 2010Barbara Gomolski & Kurt Potter11 November 20099 December 2009This presentation, including any supporting materials, is owned by Gartner, Inc. and/or its affiliates and is for the sole use of the intended Gartneraudience or other authorized recipients. This presentation may contain information that is confidential, proprietary or otherwise legally protected,and it may not be further copied, distributed or publicly displayed without the express written permission of Gartner, Inc. or its affiliates. 2009 Gartner, Inc. and/or its affiliates. All rights reserved.11/11/200952009: The Worst Year Ever for IT Growth2010: Return to GrowthWorldwide Annual Growth Rate in IT Spending, US$25%20%15%10%5%200920100%-5%Total IT($3.2T)-5.2% +3.3%-10%-15%-20%EnterpriseIT ($2.3T)-6.8% +2.3%19992001200320052007200920112013Software Spending AGRComputing Hardware Spending AGRServices Spending AGRTelecom Spending AGROverall IT Spending AGRSource: Gartner IT Market Data Book Spending Forecast, 3Q09 Update 2009 Gartner, Inc. and/or its affiliates. All rights reserved.Gartner is a registered trademark of Gartner, Inc. or its affiliates._11/11/20096IT Budget Planning Results Are Often Like LookingInto a Crystal Ball 2010 Must Be Different“Our Revenue WillIncrease by 2% in 2010- IT Budget as Well”How can we“Even Though OurMarket Share isIncreasing, IT BudgetsWill Decline in 2010”better predictIT spending“Our Acquisition ofCompany X WillIncrease Our EmployeeLevels by 25% in 2010;Budgets Are Flat”levels?“We Extended TheUseful Life of Hardware;Refresh is Planned inFY 2011”IT Leaders Must Look Externally for Planning Assumptions 2009 Gartner, Inc. and/or its affiliates. All rights reserved.Gartner is a registered trademark of Gartner, Inc. or its affiliates._11/11/20097Key Issues What are the key strategic IT industry spendingtrends, assumptions and rates of change? What key IT financial metrics are important foralignment with enterprise goals for IT efficiencyand effectiveness? How should enterprise leaders use IT marketand enterprise spending metrics to ensure morealignment with their annual strategic and budgetplanning process? 2009 Gartner, Inc. and/or its affiliates. All rights reserved.Gartner is a registered trademark of Gartner, Inc. or its affiliates._11/11/2009InitiateCancel,82010 IT Planning & Budget Process: Often FocusedOnly on IT Supply IT Leaders Have a Slanted ViewIT SupplyIT Spend% RevenueIT Budget ProcessOptimize,ProjectsChange MixIT DemandIT Industry SpendingIT Services% OpexIT Spend Per EmployeeDetermineCutoffLevelsSoftwareTelecommunicationsHardwareIT FTE % Enterprise FTEIT Spending by ResourceHardwareRankMergedListsInternal ServicesBusiness Value MetricsSupplySoftwarePersonnelAllocateOutlayRank atBU LevelDemandSupportOutsourcingIT Productivity MetricsCost Per ServerCost Per ProgrammerCost Per DesktopCost Per Help Desk CallValue,Cost, RiskDefineMicro/Macro-EconomicIndicatorsLeadingCoincidentLagging 2009 Gartner, Inc. and/or its affiliates. All rights reserved.Gartner is a registered trademark of Gartner, Inc. or its affiliates._11/11/20099IT Demand:IT Spending Forecasts byMarket Segment, Industry &Region 2009 Gartner, Inc. and/or its affiliates. All rights reserved.Gartner is a registered trademark of Gartner, Inc. or its affiliates._11/11/200910Worldwide IT Spending by Segment: Business& Enterprise Consumption of ITYear ($ USD, Billions)IT Market20072008200920102011201220135-YrCAGRInternal Services591618576574583593603-0.5%IT Services7177747467798158599073.2%Telecomm6016265835996236506791.6%Hardware267266215214221226229-3.0%Software1521681641701801932104.6%Grand Total 2,328Growth Rate2,4515.3%2,283-6.8%2,3352.3%2,4223.7%2,5224.1%2,6284.2%1.4% Return to Growth May Not Mean Return to the MarketPeaks of 2008/2007Source: Gartner Dataquest 2009 Gartner, Inc. and/or its affiliates. All rights reserved.Gartner is a registered trademark of Gartner, Inc. or its affiliates._11/11/2009112010 IT Spending Forecast and BudgetAssumptions More Indistinguishable Than EverIndustry AssumptionsPossible Budget AssumptionsHardware Asset Lifecycle Extension Alternative Technologies Better Deals on Cheap Hardware Less Hardware, More External Svcs. Server Virtualization Strategic Vendor Higher Watch for Over-Investment Introduce Non-Standard Software inSoftwareMaintenance Fees Alternatives: SaaS, OpenNon-Strategic Areas Nontraditional Means No/Low CapexSource, Non-Strategic More Outsourcing, Less Postponed HW Means Less Infra SW More Shared Less OwnedIT ServicesConsulting/Dev/Integration Industrialization/Standards Shared Vendor to Shared Technology Small Safe Deals with Short Term ROI Offshore Strengthened Delayed Tech Refreshing Cheaper Externally If Industrialized Increasingly Mobile StaffTelecom Less Price Control Mobility Svcs. - Favorable Unified Comm. More Comm. Equip. Network Svcs. Constrained CapexInternalServices Less Projects, Less Staff More Contract Labor Some Decentralization Capped Internal FTEs Levels More External than Re-Insourced PMO Skills Compensate for DecliningTraditional Skills Percentages 2009 Gartner, Inc. and/or its affiliates. All rights reserved.Gartner is a registered trademark of Gartner, Inc. or its affiliates._11/11/20091.0%12trademark ofIT Market Spending by Region: 2010 Growth vs.5-Year CAGR8.0%7.0%2010GrowthLatinAmericaAsia/Pacific6.0%5.0%4.0%Middle East& Africa3.0%2.0%W esternEuropeNorthAmericaEasternEurope0.0%-1.0%0.0%1.0%2.0%3.0%4.0%5.0%-1.0%-2.0%Japan2008-2013 CAGR 2009 Gartner, Inc. and/or its affiliates. All rights reserved.Gartner is a registered-3.0% Gartner, Inc. or its affiliates._11/11/200913Growth Rates in IT Spending Market by Industry:Almost All Are Under 2008 Growth Rates IndefinitelyIT Spending Rates of Change (Percentages and $ USD Billions)WW ITSpending2009Industry2008200920102011201220135-YrCAGR5034434332112021721141008025Financial ServicesPublic SectorManufacturingRetailCommunicationsServicesUtilitiesTransportationHealthcareAgriculture/Mining/Constr.4.65.84.94.66.36.45.74.96.91.6-8.3-4.5-7.9-7.1-6.1-5.7-6.4-8.0-6.2-9.22.6 4.13.7 4.50.6 2.71.6 3.42.2 3.91.7 2.83.4 4.11.9 3.63.0 4.81.6 3.64.64.82.93.84.33.34.64.35.23.34.75.02.93.64.33.44.64.35.73.01.42.60.11.01.61.12.01.12.40.32,283All Industries5.3-6.82.3 3.74.14.21.4 2009 Gartner, Inc. and/or its affiliates. All rights reserved.Gartner is a registered trademark of Gartner, Inc. or its affiliates._11/11/2009Source: Gartner Dataquest-0.5%14Industry Return to Growth: A View by 2010Growth Rates and 5-Year CAGR3.5%3.0%2008-2013 CAGRPublic SectorHealthcare2.5%2.0%CommunicationsUtilities1.5%RetailServicesFinancial Services1.0%TransportationManufacturing0.5%0.0%Agriculture, Mining,and Construction2010 GrowthRate0.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%4.5% 2009 Gartner, Inc. and/or its affiliates. All rights reserved.Gartner is a registered trademark of Gartner, Inc. or its affiliates._11/11/200915IT Supply:IT Spending Metrics by IndustryIT Productivity Metrics 2009 Gartner, Inc. and/or its affiliates. All rights reserved.Gartner is a registered trademark of Gartner, Inc. or its affiliates._11/11/2009Gartner is a registered trademark of Gartner,16Gartner IT KeyIT Productivity & Cost Metrics: EstimatingFuture Capacity and Supply RequirementsServerProcessorUnix Server Cost PerWintel Server Cost Per$69K$16K$23K$8KMainframe Utilization:Mainframe Cost Per MIPS63%Installed$10KUsed$14K WAN Cost/Device: $339Help Desk LAN Cost/Port: $148 Cost Per Contact: $23 Internet Access Service Cost/ 1st Contact Resolution: 65%Gigabyte: $13 Contacts/FTE/Month: 471 Voice Network Spend/Subscriber:$830 Avg. Customer Sat: 4.1/5.0Complexity, Geography, Platforms, Age of IT and OtherFactors Will Skew Comparison. 2009 Gartner, Inc. and/or its affiliates. All rights reserved._Metrics Database Inc. or its affiliates.11/11/2009Gartner is a registered trademark of Gartner,17Gartner IT KeyIT Spending & Staffing Metrics: The Final Reportfor IT Budgeting and PlanningCross Industry AveragesIT Spending % Operational ExpensesIT Spending % of RevenueIT Spending per EmployeeIT Employees % of Total Employees20085.9%4.1%$13.1k6.3%20095.9%4.2%$13.5k6.1%Run66%IT Capex29%Apps Dev.25%Grow20%IT Opex71%Apps Sup.23%Transform14%Data Center 14%Contractors23%HardwareSoftware19%19%DesktopData Net.Voice Net.9%6%3%In-House77%Personnel36%IT Mgt.8%Outsourcing18%Help Desk8% 2009 Gartner, Inc. and/or its affiliates. All rights reserved._Metrics Database Inc. or its affiliates.11/11/2009Other8%Fin. & Admin. 4%18IT Spending as a Percentage of Revenue, 2009IT Alignment is a Process, Not A Number 2009 Gartner, Inc. and/or its affiliates. All rights reserved.Gartner is a registered trademark of Gartner, Inc. or its affiliates._11/11/200919IT Spending & Budget Split: The Shift AwayFrom Higher Percentages of IT Capex ContinueIT Operational Historical and Predicted Spending80%75%70%65%60%64%66%69%71%71%76%76%77%20042005200620072008200920102011PredictedSource: Gartner IT Key Metrics Data 2009, Gartner forecasts 2009 Gartner, Inc. and/or its affiliates. All rights reserved.Gartner is a registered trademark of Gartner, Inc. or its affiliates._11/11/200920ITs Contribution to Business Value: NecessaryRequirements in Budget & Project PlanningRegional Run-, Grow- and Transform-the-Business IT Spending, 2008 2009 Gartner, Inc. and/or its affiliates. All rights reserved.Gartner is a registered trademark of Gartner, Inc. or its affiliates._11/11/200921IT Demand:Micro and Macro-EconomicIndicators, Business ValueMetrics 2009 Gartner, Inc. and/or its affiliates. All rights reserved.Gartner is a registered trademark of Gartner, Inc. or its affiliates._11/11/200922IT Services Portfolio and Catalog: Connect ITSupply to Demand For Information TechnologySupplyIT Business ValueDemandIT Cost/ WintelWintelServersIT Spend % RevenueIT Spend % OpexIT Cost/ Auto-AutomobileForecastServerPer FTEHardware - SoftwaremobileTrendsIT Cost/ UnixUnixServersIT ServicesIT Cost/ BankBankingForecastServerPer FTEManaged DesktopTransaction TrendsIT Cost/ HDCallHelp DeskCalls PerAgentApplication HostingProject ManagementApps DevelopmentIT Cost/HouseConstructedHousingStartsForecastIT Cost/DesktopsPersonnel OutsourcingIT CostAirlineManaged Per FTEsDesktop SupportIT Spend Per EmployeeIT Staff % Enterprise Staff/ AirlinePassengerPassengerForecast 2009 Gartner, Inc. and/or its affiliates. All rights reserved.Gartner is a registered trademark of Gartner, Inc. or its affiliates._11/11/200923The Focus of Transparency: ShiftingFrom Lagging to Leading IndicatorsValueLaggingLeadingFinancialMetricsInternalProcessBasedExternalEconomic- 12Months-6MonthsNow6Months12Months18Months24MonthsHow are leading indicators beingused by businesses? 2009 Gartner, Inc. and/or its affiliates. All rights reserved.Gartner is a registered trademark of Gartner, Inc. or its affiliates._11/11/200924or its affiliates.The Gartner Business Value Model: Microeconomic andLeading Indicators of Financial PerformanceBusinessAspectAggregatesPrimesTarget MarketMarket CoverageMarket ShareOpportunity/ThreatDemandMarketResponsivenessIndexProduct PortfolioIndexSales OpportunityIndexChannelProfitability IndexSales CycleIndexConfigure-abilityIndexSales CloseIndexSales PriceManagementSalesEffectivenessIndexCost of SalesIndexForecastIndexCustomerIndexIndexAccuracyRetention IndexSupplyProduct DevelopmentEffectivenessCustomerResponsivenessNew ProductsIndexOn-TimeDeliveryServicePerformanceSupplier On-TimeFeature FunctionIndexOrder FillRateCustomer CarePerformanceSupplier OrderTime to MarketIndexMaterialQualityAgreementEffectivenessSupplier MaterialR&D SuccessIndexServiceAccuracyTransformationRatioSupplier ServiceManagementSupportServicesSupplierEffectivenessOperationalEfficiencyHumanResourcesResponsivenessInformationTechnologyResponsivenessDeliverySupplier ServicePerformanceCash to CashCycle TimeRecruitmentEffectiveness IndexHR AdvisoryIndexSystemsPerformanceNew ProjectsIndexFill RateSupplier CarePerformanceConversionCostBenefitsAdministration IndexHR TotalCost IndexIT SupportPerformanceIT TotalCost IndexQualitySupplier AgreementEffectivenessAssetUtilizationSkills InventoryIndexPartnershipRatioAccuracySupplier Trans-formation RatioSigmaValueEmployeeTraining IndexService LevelEffectivenessFinance & Regulatory 2009 Gartner, Inc. and/or its affiliates. All rights reserved.Gartner is a registered trademark of Gartner, Inc.Responsiveness_ComplianceIndexAccuracyIndexAdvisoryIndexCost of ServiceIndex11/11/200925Gartner is a The trademark Gartner, Inc. its JulySource: registeredMacroeconomic Business Cycle Indicators Use for High Level AssumptionsLeadingCoincident Avg Weekly Hrs Mfg Money Supply M2 Interest Rate Spread New Orders - Mfg Payroll FTEs: Non-Ag Personal Income Industrial Production Mfg & Trade SalesPOSITIVENEGATIVEPOSITIVENEGATIVENEGATIVEPOSITIVENEGATIVEPOSITIVE70%Positive50%PositiveLagging Avg Prime Rate CPI Services Credit/IncomeFLATNEGATIVENEGATIVE100%Negative 2009 Gartner, Inc. and/or its affiliates. All rights reserved._ Conference Boardaffiliates. 200911/11/2009 Inventory/Sales RatioNEGATIVE 2009 andInc. and/or 8/4/9,11/11/2009Indicators of Economic Return to GrowthKey Indicator20082009Mens Underwear (Forecast)$4.9b$4.8bDe Beers Diamonds (6 mo.)$6.9b$1.4bNA Auto Production YTD June6.9m3.5m2010Total Housing Starts (NAHB)900k561kFRB Capacity Utilization78%68%Not Surprisingly: 2010 Forecasts are Better than 20092010 Return to Growth Does Not Mean Return to NormalMens Underwear: Source: Mintel International Group, http:/www.mintel.com/, 8/4/9National Association of Home Builders, www.nahb.org, 7/23/9J.D. PowerGartner, Associatesaffiliates. All http:/www.jdpower.com/corporate/automotive/forecasting/Gartner is a registered trademark of Gartner, Inc. or its affiliates. 26_Federal Reserve Bank, http:/www.federalreserve.gov/releases/G17/Current/table11.htm27IT Trends and Assumptions:Business Value, KeyInitiatives, Cost FocusContinuation 2009 Gartner, Inc. and/or its affiliates. All rights reserved.Gartner is a registered trademark of Gartner, Inc. or its affiliates._11/11/200928Technology Areas of Focus for 2010CloudCostERP/SCMBIVirtualizationSocial10/200812/20082/20094/20096/20098/200910/2009Source: Gartner 2009 Gartner, Inc. and/or its affiliates. All rights reserved.Gartner is a registered trademark of Gartner, Inc. or its affiliates._11/11/200929These Changes Will Require the IT Industry toReframe Value in Business TermsIT-CentricBusiness Value-Centric ERP solution Business process change Network uptime Point of sale availability App Dev lifecycle Product developmentlifecycle Critical IT infrastructure Growth-enablinginfrastructure CRM Customer acquisition andretention Cutting IT costs Delivering business value Scalability Agility 2009 Gartner, Inc. and/or its affiliates. All rights reserved.Gartner is a registered trademark of Gartner, Inc. or its affiliates._11/11/200930Extensive and Deep Interactions with our ClientBase Provide a Unique Perspective on IT2,000ConsultingEngagements65% ofFortune 100080% ofGlobal 50074Conferences10,000MediaInquiries3,500SeniorIT executives240,000ClientInquirieseach year60,000Clients75Countries650Analysts17,000Benchmarks 2009 Gartner, Inc. and/or its affiliates. All rights reserved.Gartner is a registered trademark of Gartner, Inc. or its affiliates._11/11/2009CIO,CFOSurveysHRStaffingSurveysSpecificTechnologySurveysITKeyMetricsData31Integrated Perspective on IT SpendingDaily InteractionsUsersVendorsChannelInvestorsSurveysandBenchmarksForecast byRegion&CountryForecast bySize ofBusinessForecast byVerticalIndustryForecast byIT SegmentGartner Perspective:IT SpendingCIOITOperationsFinanceHR 2009 Gartner, Inc. and/or its affiliates. All rights reserved.Gartner is a registered trademark of Gartner, Inc. or its affiliates._11/11/200932Your Action Plan Monday Morning- Re-evaluate your IT budget plans for 2010. Make sure yourinvestment priorities align with your organizations strategicobjectives. The Next 12 Months- Drive IT investment decisions from the perspective of enterprisestrategy, and ultimately, business value.- Balance the need to maintain the discipline around costmanagement with the need to support the enterprises return togrowth. On the Radar Screen- Rethink your process to IT investment planningmoving from astatic budget to a “rolling forecast” that will be more adaptablethroughout the year. 2009 Gartner, Inc. and/or its affiliates. All rights reserved.Gartner is a registered trademark of Gartner, Inc. or its affiliates._11/11/2009Gartner, Inc. and/or its affiliates. All rights reserved.33Related Gartner ResearchIT Spending and Staffing Report, 2009,Michael Smith, Kurt Potter (G00164940)It is Time to Rethink the IT Budget Process,Barbara Gomolski, Michael Gerrard, SusanLandry (G00170705)Its Time to Prepare for a Return toBusiness Growth, Ken McGee, Mark Raskino(G00167574)The Four Levels of Cost Optimization,Barbara Gomolski, Kurt Potter, Mark Raskino 2009 (G00164219)Gartner is a registered trademark of Gartner, Inc. or its affiliates._11/11/200934Thanks for participating!Do you have any questions? If you havent done so already, pleasetype your questions into the Questionspane. We will answer as many of yourquestions as time permits. 2009 Gartner, Inc. and/or its affiliates. All rights reserved.Gartner is a registered trademark of Gartner, Inc. or its affiliates._11/11/200935Gartner can take the cost out of IT in fourways Get the best pricing andterms for your IT purchases Identify major cost-savingopportunities Implement cost-savingtechnologies Implement cost-savingprocess improvement 2009 Gartner, Inc. and/or its affiliates. All rights reserved.Gartner is a registered trademark of Gartner, Inc. or its affiliates._11/11/200936Two simple steps for increasing the valueof todays webinar experience Contact your Gartner account executive(or e-mail GartnerWebinarsgartner.com) withany additional questions, comments orrequestsor to order a complimentary copy oftodays presentation Visit gartner.com/webinars for a schedule ofupcoming Gartner webinars (plus replays ofprevious webinars) and share these resourceswith your colleagues 2009 Gartner, Inc. and/or its affiliates. All rights reserved.Gartner is a registered trademark of Gartner, Inc. or its affiliates._11/11/2009