Sector outlook: IT Spending

Sectors in-the-know investors will definitely want to keep an eye on

After five years, Microsoft finally released in November the latest version of its Windows desktop operating system, launching it alongside the company's new e-mail server software and the Office 2007 suite of productivity applications. Considering that nearly all businesses use at least one of these products' predecessors–and a lot use all three–you might think that rolling out upgrades will occupy a big part of corporate IT departments' attention next year. But that's just one minor note on their agendas.

Instead, company techies will continue focusing on ways to reduce the complexity of their organization's IT infrastructure–and by extension, the cost of managing it. “Organizations are seeing that they have just too much sprawl in terms of where information is, and how much information is out there,” says Michael O'Neil, a managing director of Info-Tech Research Group in London, Ont. O'Neil points to trends of collaboration, information-life-cycle management or document and print management as being areas of growth in 2007.

IT managers will also aim to reduce complexity through storage consolidation and virtualization technologies, which use software to more efficiently manage and organize network, storage or application server resources. “It's a very strong trend,” says Vito Mabrucco, managing director of Toronto-based IDC Canada, a market intelligence provider. “Virtualization is focused on cost, but it's now also becoming a way to deliver more flexible computing services to the business.”

IDC Canada forecasts the total Canadian IT market to grow by 4.2% in the new year to $40.8 billion, similar to the rate in 2006. The three hottest areas for growth: networking equipment (5.8%), outsourcing and operations-related services (5.6%) and system infrastructure software (5.5%).

Companies will also clamour for “business intelligence” software, which mines and shapes a modern business's vast stores of data, and mobile applications, to let mobile workers do more on their BlackBerry devices. (But IT departments will really be preoccupied by the war-without-end on spam, spyware and viruses.)

Software applications sold as a service, an emerging trend of the past couple of years, will continue to gain momentum as the de facto approach with mid-market corporations. “It's going to be a lot more real in 2007,” says Info-Tech's O'Neil. He also expects so-called Web 2.0 technologies like RSS feeds, video and blogs to be deployed in a meaningful business context, especially under the auspices of “lead nurturing”–finding low-cost ways to sustain marketing efforts through the course of products' long sales cycles.

If this sounds vaguely familiar, it should. Not a lot is expected to change from last year. “There is no overnight technology that is going to show up next year and revolutionize the IT industry,” says Mabrucco of IDC Canada. It takes a lot to impress company techies these days–just ask Microsoft.