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Aberdeen Group Report: Technology Spending to Show Moderate Improvement

  Industry Statistics published in DM Direct Special Report
August 26, 2003 Issue
 
  By DMReview.com Web Editorial Staff

Enterprises are expected to increase their technology budgets by an average of 3.4 percent over the next 6 to 12 months, according to a recent survey of CIOs and other IT purchasing decision-makers conducted by Aberdeen Group, a leading market analysis and positioning services firm. In a similar survey in March, CIOs indicated their overall IT budgets would increase on average 2.7 percent over the next 6 to 12 months.

A recently released report, "Technology Forecasting Consortium: 2003 User Buying Intentions - Update," found that IT buyers are gradually opening their wallets. Their priority is to spend money on technology solutions that enable them to optimize existing business opportunities and processes through superior service."

Aberdeen Group surveyed more than 150 IT executives at the end of the first quarter 2003. The objective was to gain a perspective on IT spending and budgeting priorities. In particular, Aberdeen wanted to understand the pace of recovery from the technology spending slowdown and what sectors are likely to lead the industry in the near future.

The initial question asked: Please indicate whether your firm intends to increase or decrease its IT budget over the next 6 to 12 months. Most respondents indicated a budget change, with 87 percent stating some type of budget adjustment. The average change in IT budgets in the second half of 2003 was an increase of 3.4 percent. In comparison, in March 2003, the average response was an increase of 2.7 percent. This increase in IT budgets is a sign that the slow recovery of IT spending is continuing unabated.


Figure 1: Level of IT Budget Adjustment

Other Aberdeen research supports this trend. In "Supplier Revenues Warn of Industry Realignment (May 2003)," the top 20 supplier Q1 revenues grew 3.9 percent over last year. Based on this result and the increase in budgets for the second half of 2003, Aberdeen expects IT spending to grow at a moderate pace.


Figure 2: Quarterly Revenue Growth for Top 20 IT Suppliers

Key findings of the report, based on a recurring survey of IT executives in the Technology Forecasting Consortium (TFC), Aberdeen's end-user advisory council that assists in the early identification of trends in the IT market and the prediction of user buying intentions, include:

  • The top five application categories (out of 34) with a positive intent to purchase are content/document management applications (61.4 percent); customer service/support (45.7 percent); employee self-service(42.9 percent); help desk and field services applications (41.4 percent); and e-mail/messaging (41.4 percent).
  • Compared to the March survey, the average intent to purchase for all 34 application categories combined decreased slightly, as did the average priority to purchase. Buyers are still hesitant. Technology suppliers need to introduce new pricing models and purchasing programs to stimulate demand. They must also develop better channel programs to reach mid-sized enterprises.
  • The top three technology infrastructure solutions with a positive intent to purchase are security gateways and services; network and systems management; and application development tools.


Figure 3: Intent to Purchase Technology Infrastructure

This new report is available on www.aberdeen.com. For more information, call 800-577- 7891.

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For more information on related topics visit the following related portals...
Strategic Intelligence.

This piece has been brought to you by the DMReview.com Web Editorial staff.

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