Skip to main content

Large-cap tech entering a period of out-performance? Here's why

Read an interesting article at ComputerWorld today that got me thinking. The title: "IT centralization is back in fashion."

It is useful to think about what this means for IT organizations and the vendors that support them.

Why centralize?

With technology assets centralized in one place, it's easier to take advantage of opportunities for efficiency and streamlining such as virtualization, storage de-duplication, cloud computing and outsourcing, all of which promise to lower costs.

Centralization also makes it easier to create an effective disaster recovery strategy, minimize labor redundancies (ie, reduce expensive IT staff), get volume discounts on technology purchases, and lower maintenance and training costs through standardization.

Is the trend real?

There's some statistical evidence of a tilt toward IT centralization. In Computerworld's recent Forecast survey, 37% of 312 respondents said it's likely that their IT units will become more centralized in the next 12 months. And in a 2009 IBM survey of 2,500 CIO worldwide, 76% of respondents said they anticipated having a strongly centralized infrastructure in five years.

IBM itself last year completed a shift to centralized IT management, reducing the number of data centers it operates from 155 to five and trimming its portfolio of applications from 15,000 to 4,500.

Which vendors will qualify?

The move to centralization will see CIOs looking to vendors who can offer several of the following major benefits:
  • Products should efficiently scale up to handle greater numbers of user and transactions.
  • Vendors must offer greater out-of-the box integration of wide-ranging functionality
  • Vendors should also offer IT services either for system implementation or longer-term outsourcing
  • Vendors who can offer quantity discounts or concessions on corporate-wide site-license pricing will have an advantage
The largest IT vendors are the companies that most easily meet all the requirements listed above. This means companies like Cisco Systems, IBM, Oracle, Hewlett-Packard, EMC, VMWare, SAP, Computer Associates, Teradata, Microsoft, Dell, NetApp, Juniper Networks, Fiserv, BMC Software and Compuware.

The folks at IBM think we have a 5-year cycle during which the centralization trend will maintain its popularity before the pendulum begins to swing in the opposite direction. During that time, large-cap tech stocks can be expected to out-perform.
Labels:

Comments

Anonymous said…
so which company you like best?..csco,msft,ibm??
March 9, 2010 at 10:43:00 PM EST

Post a Comment

Popular posts from this blog

Trade Radar gets another update

Some of our data sources changed again and it impacted our ability to load fundamental/financial data. In response, we are rolling out a new version of the software: 7.1.24 The data sourcing issues are fixed and some dead links in the Chart menu were removed. So whether you are a registered user or someone engaged in the free trial, head over to our update page and download the latest version. The update page is here:   https://tradingstockalerts.com/software/downloadpatch Contact us if you have questions or identify any new issues.
Post a Comment
Read more

Unlock Stock Market Profits - Key #4

This is the fourth article in a series of posts describing 10 tools to help you identify and evaluate good investing ideas. It is based on a post that provides a summary of the ten keys that individual investors should use to identify profitable stock trades. ( Click here to read the original post ) With this fourth post, we will continue another step along the path of finding stocks that seem to have some potential. The first post in the series discussed how to use unusual activity to identify investing ideas. The second post described how to use stock screeners. The third post described how to use lists of new highs and new lows. This post will focus on identifying social or business trends in order to find investing ideas. Information on new trends might turn up anywhere. In conversation with friends or business associates, in newspapers or magazines, on TV or though your work. The key is to be aware of trends and how they start, stop or change. We'll start by describing what...
6 comments
Read more

Pick 'o the Month - a two'fer

Usually I focus on a single smaller, more obscure stock. In this case, I would like to submit two stocks, a large-cap, Cisco Systems ( CSCO ), and a small-cap, Big Band Networks ( BBND ). These two stocks embody a resurgence in the network infrastructure space. That theme is what ties these two picks together. With the rising tide of video, music and movies downloaded over the Internet and cable companies offering bundled TV, phone and Internet, we have finally absorbed the glut of network capacity created during the Internet bubble. This deluge of multimedia is changing service providers’ business models, and the ways they manage and develop networks. The focus now is on how to move, manage and monetize content that is richer and more complex than ever before. In response, as telecommunications companies ramp up newer, faster networks to handle all this traffic, Cisco Systems is a prime beneficiary. As the dominant player in network infrastructure, it has already seen profits begin to...
1 comment
Read more