Neowin.net

Corporate spending on IT (information technology) in 2002 will not come close to matching the free-spending levels of the late 1990s, but according to a new study it will be a vast improvement over last year.

Aberdeen, an IT market analysis firm, said technology spending this year will increase by about 4 percent to 5 percent over 2001 levels. The firm surveyed 150 IT executives from 11 technology infrastructure segments.

Hugh Bishop, senior vice president for Aberdeen, told Newsbytes he expects little IT spending growth in the first two quarters of this year, with improvement during the third and fourth quarters.

View: Aberdeen Homepage
News source: Newsbytes - Tech Spending Should Increase Gradually In 2002

"The 4 percent to 5 percent growth rate for the year is well below the 8 percent to 12 percent that was typical in 1999 and 2000," said Bishop.

"In 2001, there was a dramatic drop-off. Some sectors had negative growth."

"It wasn't as if the whole market contracted 30 percent," he added.

"Some software infrastructure applications did well, especially security and back-up applications after Sept. 11."

Looking ahead to the rest of this year, Bishop said software or applications that promise to improve CRM, or customer resource management, will draw IT budget dollars. The Aberdeen survey found CRM drew high marks in both the "intent to purchase" and "priority" categories.

"'Priority' means not only is the intent there, but money is budgeted and people are evaluating the systems," he explained.

Other expected hot sellers in 2002 will be applications that assist content management, document management and Web analytics. Bishop said the latter category consists of programs that analyze Web traffic and optimize it.

"The idea is, you take your existing site and find out what works and what doesn't," he said. "Everyone is looking for practical applications that have a perceived and understood return on investment. They want to optimize their business processes and retain existing customers. They are not looking to go out and build a brave new world."

One problem with these spending priorities is the possibility of overlooking something that might prove valuable if given a chance.

Bishop said many applications suffer from what he termed a "perception problem."

One example of this is professional services automation. According to Bishop, these programs optimize the business of an IT consulting firm.

"It sends professionals out to client sites. It increases billable hours - and therefore pays for itself - by scheduling more efficiently," he said. "It puts more people in front of customers with the meter running."

Adding to this "perception problem" is the fact that suppliers in this relatively new category have not gotten the word out.

"In times of uncertainty, when every budget dollar is scrutinized, certain things fall down the priority line due to lack of champions within the organization," said Bishop. "They are going to put their money in things that will get their money back, and fast."

"Vendors must communicate what the value of their software product is," he added.