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    Home IT Management
    • IT Management

    Report: IT Spending Shows Slight Improvement

    By
    Deborah Rothberg
    -
    March 13, 2006
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      Information technology spending is showing “subtle signs of improvement” with 19 percent of companies expecting 2006 spending to increase 10 percent or more, according to a Goldman Sachs survey.

      Released on March 10, the survey polled 100 managers in charge of technology purchases. Goldman Sachs analyst Laura Conigliaro found that the top three spending priorities remain security, application integration and compliance/risk management.

      “Our surveys latest readings on spending health continue to point to a 2006 IT spending picture similar to that of 2005, with some subtle signs of improvement,” said Conigliaro in the report.

      The survey shows both Dell and Hewlett-Packard gaining share of respondents IT spending dollars with Sun Microsystems falling behind.

      Conigliaro notes that Dell has been named by respondents as a share gainer in almost every survey conducted since 2001. Alongside Dell in the IT spending gain category is HP, which is notable because the company has focused on improving profitability.

      Lenovo, the sole share loser, is seen by Conigliaro as further evidence that customers that were once loyal IBM users are now beginning to dual-source their PCs.

      /zimages/6/28571.gifIs your IT budget stretched too thin? Click here to read more.

      By category, Conigliaro found that storage virtualization, though in its early stages, is becoming a key factor in the storage purchasing decisions for an increasing number of companies.

      Thirty-five percent of respondents said they were planning to implement storage virtualization over the next year, marking a return to October 2005 levels after falling seven points in December.

      This number has nearly doubled since last June, owing to a need to simplify storage management across multiple tiers.

      The number one position in storage virtualization is still owned by EMC, followed by HP. IBM, in the third position, has fallen nine percentage points since December 2005.

      Polled IT managers named Microsoft as the top strategic software partner in helping them move to a SOA/Webs services model. Other big names—Oracle, IBM and SAP—filled out the top five slots.

      Nearly a third of respondents indicated that they plan to increase their Oracle database capacity over the next 12 months. Goldman Sachs analyst Rick Sherlund said that Oracles database business remains the primary growth driver for the company, but that he does not expect any expansion in the stock until investors are more confident that the database can improve.

      The service sector report shows that demands for outsourcing, though up from the prior month, remain toward the low end, which Goldman Sachs analyst Greg Gould attributes to the recent acceleration in consulting and systems integration.

      He also finds that offshores threat to traditional integrators appears to be waning, good news for domestic multinational IT services providers.

      /zimages/6/28571.gifClick here to read about the top 10 IT projects for 2006.

      The percentage of respondents that said they would consider offshore delivery for IT services outside of traditional application management fell one percentage point, to 20 percent, since December 2005, but thirteen points since last October.

      Fifty-eight percent of respondents expect to increase communications equipment spending with Cisco Systems in the next year. This number has grown almost 10 points since February 2005. Goldman Sachs analyst Brant Thompson found that this reflects CIOs increasing need to address security, reliability and capacity network needs on an ongoing basis. Cisco is expected to have a strong 12-month outlook.

      Sixty-seven percent of respondents, down almost 10 points since October 2005, expect to increase their network spending in the next twelve months. But despite this decline, Thompson feels that this is a strong majority, and the outlook is positive.

      /zimages/6/28571.gifCheck out eWEEK.coms for the latest news, reviews and analysis on IT management from CIOInsight.com.

      Deborah Rothberg

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