IDC FUTURESCAN
is a collection of metrics of IT industry leading indicators and customer
surveys. Values are based on expectations of future growth, with a value
of 1000 equating to zero growth and each 10 points representing roughly
1% of expected growth.
These are external indicators only and don't represent IDC's
forecast for the market, which is based on many more inputs and which
relies on strict methodologies and market definitions.
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Last month's faint good news gave way this month to the forces of darkness. Perhaps it was the realization that today's gas prices might just be the floor of some future price, rather a ceiling. Or perhaps the flooding in the Midwest. Post primary letdown?
IDC's IT spending forecast for the next 12 months - 4.3% - is still ahead of these indicators, but it may be nip and tuck as to whether that forecast will have to come down again.
On the other hand, the mid month economic forecast for GDP growth in 2008 coming out of Consensus Economics, Inc., actually went up a little to 1.5% from the poll the month before.
Of course this was before the stock market dropped 9% (S&P 500), oil shot up to more than $140 a barrel, unemployment jumped by nearly a million jobs, and the Economist Intelligence Unit lowered its forecast of 2008 U.S. GDP growth to 0.8%.
Perhaps it's just good news that our FutureScan indicators didn't drop further for July.
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Last month we were hoping that two months of upticks meant we were at the bottom of a trough and soon to go back up. Our fear was that the trough was actually a plateau.
Now our fear is that the plateau is actually a ledge, one we could fall off any minute.
The IT community has two saving graces, however:
1) We are at a point in the IT business cycle where the new technologies have become mission critical for businesses, making other budgets more expendable than IT budgets, and
2) IT vendors are generally diversified, with plenty of business outside the U.S. to help drive new investment and innovation.
It would be nice if the bad news stopped, however.
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Buyer Intent
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So we may not be through the worst of it, as we hoped last month.
Given the economic news it's no surprise that the buyer intent metric dropped for July. Oil prices, commodity prices, consumer confidence, housing prices, flooding, and even 17-year locusts on Cape Cod (Magicicada septendecim, actually a cicada) .
What's is surprising is how the CIOs and their line of business counterparts keep passing the role of optimist back and forth. In the old days, CIOs were always more negative.
Perhaps that's an indicator in itself. When CIOs are your optimists, things can't be good.
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Market
Indicators History |
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The stock market took the wind out of the macroeconomic indicator's sails this month. It went back to April's negative territory.
Meanwhile, expectations for vendor revenues remained higher than either IDC's forecast for IT spending or buyer spending expectations. It's that extra boost in the numbers from non-U.S. revenues and perhaps some current dollars - rather than constant dollars - that snuck into the forecast models.
At least the macroeconomic indicator is above 1000. That's good, right?.
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The Buyer Intent metric is based on surveys of 400-500
U.S. CIOs and line-of-business executives on their expectations
for IT spending growth during the next 12 months. Results
are carefully weighted to be representative of the U.S.
market. These surveys are conducted monthly by the Quantitative
Research Group (QRG) within IDC's Global Research Organization.
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The Market Indicator metric combines inputs from economic
and IT industry supply-side indicators including:
- The stock market (S&P 500 over last 6 months)
- Current interest rates
- The current GDP forecast for the next 12 months
- The current US corporate profit forecast (next 12 months)
- The IDC IT Revenue Forecaster (% revenue growth expected
next 2 quarters)
IDC combines and weights the inputs using information
developed in its Leading IT Indicators program on the
relationship of macroeconomic trends to IT spending.
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IDC FUTURESCAN is a collection of metrics of IT industry leading indicators
and customer surveys. Values are based on expectations of future
growth, with a value of 1000 equating to zero growth and each
10 points representing roughly 1% of expected growth.
These are external indicators only and don't represent
IDC's forecast for the market, which is based on many
more inputs and which relies on strict methodologies and market
definitions.
For more information about any of IDC's Black Books or other
GRO products, please contact Amie White at awhite@idc.com
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