IT Spending To Rebound

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Senior IT executives expect spending on information technology to rebound over the next 12 months, according to a survey by the Software & Information Industry Association (SIIA).

More than half (51 percent) of the survey's 53 respondents said they are looking for the recovery to begin before the end of the second quarter 2004 and just under 70 percent think a recovery will begin before the end of the third quarter 2004. Respondents mainly consisted of CIOs and IT directors.

Most Significant Factors Impacting IT
Spending in 2003
Lower profits/revenue42%
Current systems are adequate23%
Need new functionality for business competitiveness19%
No pressure to change/upgrade8%
Need to integrate old systems more tightly6%
Lack of support from senior management4%
Source: Software & Information Industry Association

"The results of this survey are timely for all segments of the IT industry," said Fred Hoch, vice president of SIIA's Software Division. "As the recovery in IT spending gets underway, it's critical for IT managers to be up-to-date on the most appropriate products and solutions for their companies. Now is the time for vendors to connect with potential customers — the last thing they want to do is miss the coming rebound."

Market Segments
The survey suggests that several segments of the IT market will benefit. More than one-third (36 percent) of respondents plan to begin new remote access and/or mobility projects, 34 percent say they will focus new spending on security products, and 30 percent will begin server replacements and upgrades. Software spending will focus on infrastructure upgrades, middleware, CRM and portal/intranet deployments, and security, said Anne Griffith, SIIA's director of research.

The results are in line with spending survey's conducted by the likes of Gartner and Aberdeen, which are calling for spending rebounds in '04, she said.

The survey also indicates momentum behind Web services. Nearly 65 percent of respondents say they currently use Web services technologies and standards and, over the next year, 66 percent say they will either begin or continue a Web services project.

One of the more surprising findings indicates 60 percent of respondents said they are considering the adoption of open source Linux both in their server environments and 40 percent, a number Griffith finds a bit high, said they are looking at Linux for their desktop deployments as well.

"I just don't hear 40 percent of companies using (Linux on the desktop) so that may be an artifact of our relatively small sample," she said. "We could have just gotten a very techi set of respondents that would like to be able to do that."

At 28 percent, hardware purchases also figure prominently in responses, she said. This may because 62 percent of respondents said they had slowed desktop upgrades in 2003 and 43 percent said server purchasing has been on hold.

"What I found interesting was a big chunk of people are planning to spend money on hardware," she said. "Hardware purchases have been dragging pretty hard, even more than software purchases. People do eventually have to upgrade and replace stuff."

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