Negotiate the best deals now while vendors are struggling

IT decision-makers need to negotiate the best deals they can get now, because next year the balance of power will shift back to the vendor, says Gartner.

The analyst is predicting a slow but sustained recovery in 2004 but warned delegates to its Spring Symposium in Florence that they will have to fight to reap the benefits.

This year's bargain basement sales will disappear because consolidation will put vendors in a much stronger position to force through licensing and upgrades. The trend will put pressure on tight budgets, said group vice president Peter Sondergaard.

'2003 will be the last year of doom and gloom,' he said but an upturn will not be necessarily be matched by large increases in IT budgets in the short term.

The analyst's 2003 IT Budget Survey in Europe reveals that 58 per cent of CIOs expect their budgets to remain the same as last year, a slight increase.

Leaner IT departments will be expected to make the most out of existing systems.

'The combination of slack budgets this year and next, the need to replace outdated hardware and software, and maintenance overheads from boom-time investments is leaving CIOs with almost no discretionary spend.

'CIOs will need to cut at least 10 per cent of older, inefficient environments to create any discretionary spend in 2004.'

The IT department will need to change to get the maximum benefit from the recovery, said Group vice president Nick Kirkland.

'Intense cost pressures amid increasing demands will suit those CIOs who are able to build bridges to the rest of the business, show leadership and demonstrate the business value of what they can do.'

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