SOURCE: GCR Custom Research

September 19, 2006 10:00 ET

GCR Custom Research's IT Watch Surveys Indicate Continued Budget Optimism Among IT Managers

Security Concerns, Financial Controls, and Key System Upgrades Drive Spending Higher

PORTLAND, OR -- (MARKET WIRE) -- September 19, 2006 -- GCR Custom Research, a leader in global market research, today announced the latest forecasts for enterprise spending on information technology (IT). IT Watch respondents report that U.S. organizations are spending 6.2 percent more on IT this year compared to last. Additionally, they forecast that spending will further increase next year to 4.4 percent.

"Three key priorities are driving increased investment in IT this year: security, financial controls, and earmarks for upgrading to new versions of Microsoft Windows and Microsoft Office," Brian Smith, product manager of IT Watch, said. "Above all other issues, respondents tell us that the top priority this year is improving security of IT systems. Security spending on hardware and software has steadily risen since the start of the decade, and this trend continues this year. Budgets for dedicated security systems applications are also growing. Companies selling security-related software such as antivirus, firewall, virtual private networks (VPNs), identity, access management and authentication solutions are benefiting."

The second key driver of increased spending is the push toward instituting improved financial controls of IT systems, according to IT Watch respondents. Compliance demands by legislation such as Sarbanes-Oxley and privacy mandates of the Health Insurance Portability and Accountability Act of 1996 ("HIPAA") continue to drive new investments in IT.

Finally, respondents report upgrading software and hardware as a top spending priority this year. The anticipated release of Microsoft Office 2007 later this year and the Windows Vista operating system are driving software budgets upward. Upgrading legacy hardware systems and increased spending on server consolidation are driving hardware budgets upward.

"Judging by our survey results and respondent comments, we see larger budgets being earmarked for IT contractors, as well as sizeable increases for software next year," said Scott Evans, vice president of Applied Methodologies and Product Development, GCR Custom Research. "We also see double-digit growth forecasted for mobile devices such as PDAs, smartphones, cell phones, and tablet PCs. In addition, the financial services industry continues to lead the way as a big spender on IT -- with expected growth to reach nearly 12 percent this year and similar levels next year."

"Accurately understanding how IT dollars will be spent is essential in the marketing and selling of IT products and services, as well as assessing the performance of technology vendors," said Bob Falcone, CEO of GCR Custom Research. "The IT Watch service is demand driven, unlike most other services. The size of the panel and the ability to provide information on spending by company size on a regular basis is unique and a precondition to success."

Hardware Spending Down Slightly This Year, To Rebound Next

Hardware budgets are down an estimated 1 percent from last year. This year, the largest declines in hardware spending have occurred among manufacturing, retail, communications/high-tech manufacturing and energy. Anticipated higher growth rates in these verticals for 2007 indicate there is still time for spending to rebound during the remainder of this year, though this is considered more likely to occur in verticals showing stalled growth in 2006.

Across all categories, IT Watch data indicate hardware budgets in U.S. enterprises are expected to increase in 2007 by an average of 4.3 percent. "Much of the increased spending can be attributed to spending on mobility hardware such as tablet PCs and PDAs as well as to storage hardware and networking equipment rather than desktop computers, which continue to see performance improvements with little to no impact on cost," Brian Smith said. Enterprises in manufacturing, financial services, and professional services forecast higher-than-average IT budget growth rates.

Mobile Devices Lead the Way in Category Spending Increases

Although total enterprise hardware budgets have declined this year, mobile hardware and services have increased significantly. Data indicate double-digit growth in spending in categories such as tablet PCs, PDAs/handhelds and enterprise-sourced mobile phones. Similar growth for 2006 and 2007 is expected for mobile voice/data services, which reinforces the trend in mobile devices.

Big-Spending Verticals

IT Watch data also indicate that financial services, professional services, retail and manufacturing have the biggest budgets for IT spending. The financial services industry is forecasted to reach nearly 12 percent this year, doubling the average for all industries, and will continue next year at a rate of about 7 percent.

The professional services industry comes in second with expected growth of almost 6 percent this year and is expected to slow to 5.4 percent for 2007. Manufacturing ranks third in terms of total spending on IT products and services. Expected growth for this year is about 6.3 percent and 3.3 percent for next year. Retail comes in as the fourth largest vertical for IT spending. However, in terms of spending growth, this vertical ranks near the bottom, ahead of only health care, communications and high-tech manufacturing. This year, external IT spending is up 2.9 percent over last year, and next year spending is projected to increase 4.2 percent.

About IT Watch

IT Watch is a subscription-based service that surveys key IT decision makers to understand changes in enterprise demand for IT products and services each month. Through its continuous survey approach, IT Watch provides IT vendors and investors with a valuable tool for effectively capturing important monthly IT spending patterns for software, hardware, IT services and more -- allowing them to reduce risks, uncover opportunities, and improve business results.

IT Watch tracks the IT spending for security software companies such as Symantec, CheckPoint, Cisco as well as other software and hardware companies like SAP, Oracle, Microsoft, IBM and EMC. GCR interviews CIOs and key decision makers every week about their IT budgets, current spending and future plans. Through this approach, IT Watch has the power to anticipate shifts in IT markets and demand. Monthly reports provide a detailed analysis of market trends at a top level for specific sectors, for specific product categories and for specific vendors competing within product categories.

IT Watch Spending Report Pricing

The IT Watch Spending report is an eight page report detailing the most significant findings from that month's data analysis. GCR is now offering a yearly subscription to the IT Watch Spending Report for $1,595. This includes 12 monthly reports which provide a discussion of overall spending trends as well as specific industry and technology analysis. The IT watch Spending Report is an executive summary of data collected each month. The IT Watch service pricing is based on number of seats and features required.

To subscribe to the monthly IT Watch service or IT Watch Spending Report or to learn more about IT Watch call Rachel Weikum at (503) 636-4762 or email at rachel@weikumcommunications.com.

About GCR Custom Research

GCR Custom Research, LLC, formerly a division of Gartner (NYSE: IT), is a leading provider of global market research specializing in custom IT research and proprietary market tracking services. Based in Portland, Ore., GCR's team of professionals combine more than 25 years of industry experience with world-class custom research and proprietary market tracking services to provide clients with unique insights into market demand, market sizing and buyer sentiments that clients apply to improve their business. GCR offers a full range of custom research services from exploratory qualitative research to the most complex quantitative data modeling. Additionally, GCR collects and offers unique customer and market data through their IT Decision-Maker Panel and IT Watch. For more information, visit: www.gcrinsight.com.

Contact Information

  • Media Contact:

    Rachel Weikum (for GCR Custom Research)
    Weikum Communications
    Email Contact
    (503) 636-4762