Impact of banking meltdown on Tech spend

From Silicon Alley Insider:

Forrester Research says the financial sector's troubled firms (Lehman, Merrill, Bear Stearns, AIG, Fannie, Freddie) all together equal about 2% of tech spending. Given Forrester sizes the US tech market at $572 billion, that's about $11.4 billion dollars at risk.

That 2% puts things into perspective, though the knock on effects would make it bigger than just the immediately effected business, as SAI goes on to note quote Forrester CEO George Colony:

The biggest risk to the tech market comes, not from the Wall Street collapse, but from a collateral U.S. recession. Forrester expects a mild recession in the U.S. and Europe lasting through Q3 and Q4 of 2008, and Q1 of 2009. While tech spending grew 8% in the U.S. in 2007, we are forecasting tech purchases to be up 5% in 2008, and up 6% in 2009.

SAI notes that the government bailouts are keeping some of those firms and their billions of dollars in tech spending alive. And even in death banks like Lehman and Merill spur Wall Street IT spending. Colony again:

the rigors of mergers and integration could also be drivers of new tech spending. Bank of America, Barclays, and JP Morgan have 36 months of intensive technology integration work ahead -- this will drive professional service, software, and to a lesser extent, hardware spending.

As SAI notes:

Translation: Bank of America took over Merrill, and Barclays bought Lehman's data centers. The work to get technology and enterprise systems like general ledger and human resources under the same umbrella can be a bonanza for tech consulting firms like Accenture (ACN) or HP's (HPQ) EDS.

True, and thats not really a spend that New Tech will see - unless the Enterprise 2.0 movement can persuade these players that there are significant benefits to adopting new technologies during rationalisation.

Sorry, no real conclusions yet, this is just an early datapoint. This is a big thing we are seeing happen, and it will take some time to play out.