back to article It would take a 'catastrophic' recession to stop tech spend growth, says IBM boss

Corporations large and small are not yet showing any signs of clipping their enterprise technology spending says IBM's boss, despite mounting fears about the parlous state of economies around the world. Maybe it's wishful thinking. Blue Blue CEO Arvind Krishna was yesterday speaking at an Economic Club of New York event and …

  1. bregister
    Coat

    Magical thinking

    I cannot see how IT stands outside the normal economy. The customers of IT companies live in the real economy, an economy heading toward contraction. These people forcasting a great recession for IT are either a) unable to count or b) have a vested interest in keeping up appearances.

    Mines the dirty one with the holes, that I sleep in -->

    1. EVP

      Re: Magical thinking

      “As I talk to CEOs and CIOs across the globe, almost none of them are talking about cutting down technology spending," he said.

      I call that bullshit, He is just trying to secure his bonuses by laying FOMO upon people who are in charge of IT expenditure. Do not trust him.

    2. Anonymous Coward
      Anonymous Coward

      Re: Magical thinking

      > I cannot see how IT stands outside the normal economy.

      This man can:

      https://www.reuters.com/breakingviews/big-tech-layoffs-are-dystopian-job-market-fiction-2022-11-18/

      1. Twanky

        Re: Magical thinking

        From the linked Reuters article I note that the Federal Reserve has the same 2% inflation target as the UK's Bank of England...

        "the Federal Reserve, which has a mandate to bring inflation down from an annual rate of 6.3%, excluding food and energy prices, to its target of 2%

        ...except that the Federal Reserve's target excludes food and energy prices. Odd.

    3. GruntyMcPugh

      Re: Magical thinking

      My thoughts exactly, and we had a meeting last week asking for suggestions on cost cutting, and IT spend was mentioned.

      Although, to be fair, IBM don't produce anything we'd want to buy, so they aren't having conversations with organisations our size. I guess banks etc are probably locked into a technology refresh roadmap, and have a pretty good idea when their new mainframe will get delivered.

  2. JimmyPage

    It would take a 'catastrophic' recession to stop tech spend growth, says IBM boss

    UK government: Hold my beer.

    1. Anonymous Coward
      Anonymous Coward

      Re: It would take a 'catastrophic' recession to stop tech spend growth, says IBM boss

      "UK government: Hold my beer."

      Keep up, keep up Boris/Truss/Rishi/'Uncle Tom Cobbly' and his pals have standards you know !!!

      TFIFY:

      UK government: Hold my Champagne Bottle ... !!!

    2. Twanky
      Boffin

      Re: It would take a 'catastrophic' recession to stop tech spend growth, says IBM boss

      The thrust of this article is that there's a global economic problem [caused by a global event in 2020/21 IMO] but that some think that technology spend is somehow resistant to this.

      Sure, IT spend is more difficult to trim now almost everything is in the cloud - provided the business keeps going. It's certainly not immune if the business goes bust.

  3. Anonymous Coward
    Anonymous Coward

    "83 percent of IBM mainframe customers are intending to modernize their systems and 46 percent of those want to opt for IBM's hybrid cloud approach"

    Not sure what the spin is here.

    Lets play a numbers game. Say this is 100 customers.

    17 want to stay where they are, drop mainframes altogether, or that they are already at the front of the curve?

    46 want a "hybrid approach".

    37 want to 'modernize' (whatever that means - to me, modernization means getting OFF of mainframe where possible).

    On top of that, I can bet that isn't a poll of ALL of IBM's victims. I mean customers.

    IBM spin can make even Vik Reeves dizzy.

    1. OhForF' Silver badge

      Different interpretation

      Out of 100 existing IBM mainframe customers 83 are not happy with the current state and want to change something.

      Less than half of those 83 (46% ~= 38) consider IBM's hybrid cloud approach. The remaining 45 are probably looking for solutions that do not involve IBM.

      Loosing about half of the existing mainframe customers all together isn't that much of positive outlook for IBM's business, is it?

  4. Plest Silver badge
    Happy

    "catestrophic recession" you say? We'll we just sacked a premier that dumped the UK £30bn int he hole and now the last Tory shower are about to slaughter most of us with taxes for the next 5 years....we got you covered!

  5. Anonymous Coward
    Anonymous Coward

    He just hasn't met the right twit.

    I guess he doesn't know Elon "Pol Pot" Musk then.

  6. jake Silver badge

    Oddly enough ...

    ... as I talk to CEOs and CIOs across the globe, every single one of them is discussing cutting back on tech spending. And every other kind of spending. Except their own salary and compensation package, and those of The Board, of course. All the while promising to increase value to the shareholders.

    Note that's cutting back on spending, not stopping spending altogether. Big difference.

    1. Anonymous Coward
      Anonymous Coward

      Re: Oddly enough ...

      Big +1 here. I work in the big-and-chunky end of the market where IBM like to think they're still relevant and the past three months has been characterised by crash budget meetings to try and find opportunities to pause projects, defer investment and generally to just spend much much less money than they were planning to. I've got no idea who he's been talking to, but if he's banking IBM's next cycle on IT growth continuing unabated he's in for a fucking shock. Post-covid everyone's already debted up to the gills and with interest rates spiking there's just no slack for counter-cyclical investment. If you're exposed in the UK you've got another hit in the form of Brexit and the Idiot Premium to grapple with as well.

  7. Anonymous Coward
    Anonymous Coward

    If IBM is so good at forecasting markets, how come they're a pale shadow the powerhouse they once were, hmm?

  8. vtcodger Silver badge

    A small circle of friends

    "“almost none of them are talking about cutting down technology spending," he said.

    Why did Phil Ochs singing "I'm sure it wouldn't interest anybody outside a small circle of friends" pop into my head when I read that?

    In point of fact, I should think that IT spending will be one of the first casualties if it becomes apparent that Plan A -- freeze everybody's budget at last year's levels -- isn't going to restore health to bottom lines.

  9. Tron Silver badge

    Well...

    Taking down globalisation, switching to a nation-state model with a new Cold War divide, and flipping from a low-tax/high-profit global economy to a high-tax, low-profit one, is just about the only thing that could deliver a catastrophic recession. So you are in luck.

    And with Brexit, the UK will be the first G7 nation to comprehensively tank. A decade/generation of misery and socio-economic decay has now begun

  10. Anonymous Coward
    Anonymous Coward

    Yeah, well

    IBM caters to governments and large institutions primarily. They don't want SMB at all. So, yeah, spending for them will continue, it always does. Large customers always need to spend to upgrade and migrate systems, etc. However, every spending survey I've seen recently has cost reduction or cost optimization at or near the top of the list of priorities in IT across companies of all sizes. Hmmm. As a tangent, investment in new tech companies has fallen off a cliff. Most of these are SaaS companies that would use one of the major cloud providers as their hosting platform. For cloud, add that all the major clouds are approaching a saturation point for those customers that intend to use public cloud and I think there is a bit of a storm brewing in the cloud world. Oh wait, it's already here - cloud revenue growth from all the majors is slowing down. IMO, tech company closures and layoffs will be significant in the next year or two. Now, add the crypto debacle to the mix where many startups were using crypto-backed assets somewhere in the investment stream to get real money from real banks and their crypto collateral just disappeared. Oopsie. Very strange times ahead.

    1. Lars Silver badge
      Pint

      Re: Yeah, well

      "Very strange times ahead."

      Has it ever been different in human history.

      Suppose I need one.

  11. Potemkine! Silver badge

    As IT is considered by many CEOs as a burden rather than an asset, IT is often one of the first activities to be impacted by costs reduction.

    They are wrong, they lack of vision, but shareholders immediate interests always come first.

    == Bring us Dabbsy back! ==

  12. trevorde Silver badge

    IBM Press Release

    IBM's quarterly RA's will start early so as to give executives a Xmas bonus. Those remaining will be asked to work 'hardcore at high intensity'. All WFH will stop immediately. Going forward, minimum grade to avoid a PIP will be 1.

    Have a hardcore Xmas,

    Elon Musk

    Big Blue Chief

POST COMMENT House rules

Not a member of The Register? Create a new account here.

  • Enter your comment

  • Add an icon

Anonymous cowards cannot choose their icon

Other stories you might like