NEW YORK (TheStreet) -- As a group, the information technology industry has been a standout performer, posting 2014 gains of 21.47%, compared to the 8.9% gain in the S&P 500 (SPY) and the 4.71% gain in the Dow Jones Industrial Average (DJI) , according to research firm Fidelity.
This wasn't supposed to happen, however.
The IT/enterprise sector, which consists of software, hardware, cloud and Big Data companies, entered 2014 with only modest expectations. Industry experts projected global IT spending in 2014 would remain stagnant to slightly lower. In some cases, these predictions have been spot on.
Case in point -- After losing 3% of its value in 2013, IBM (IBM) shares are down 17.5% in 2014. The company continues to be hurt by weakness in global IT spending. But that's only part of the problem. IBM is still hurting itself, positing declines of more than 16% over the past three years.
While Big Blue is still a posting strong profits, Wall Street no longer cares about that. It's about survival and growing the top line. This is where IBM has struggled. So for these shares to rebound in 2015, the company must figure out a way to become relevant in an industry that is moving away from on-premise systems to cloud-based systems. Companies no longer want to manage their own servers onsite.
Instead, corporations are embracing the type of on-demand cloud service offered by smaller rivals like Salesforce.com (CRM) (up 7.83%) and Workday (WDAY) (down 0.37%) -- a platform known as SaaS (software-as-a-service).