IBM and Microsoft big winners in IT spend up

IT managers focus on application renewal and network-level security, says study

IBM and Microsoft are set to be the main beneficiaries of IT spending in New Zealand and Australia this year, according to a survey by Forrester Research.

A question titled “With which hardware and software vendors will you change your spending the most in 2006” showed that Microsoft and IBM came up tops in the software stakes, with 33% of respondents saying their spend with Microsoft would rise this year and 26% saying they planned to spend more with IBM.

Brisbane-based Forrester analyst Sam Higgins says IBM and Microsoft stand to benefit from the predicted spending because of their offerings in application integration and renewal, which was one of the key areas identified by respondents as a priority for this year.

“Application renewal has begun [and] 45% of companies expect to make major cuts to legacy maintenance and a mere 8% intend to spend more on it,” he notes in the report.

“However, these replacement applications will likely be custom-built, as the purchase of packaged applications looks to stall or even decline.

“Instead, local organisations are increasing their spending with the traditional application development platform giants Microsoft and IBM and the net result is an ongoing trend towards rebuilding and integrating applications by hand.”

Higgins’ evidence for the predicted stagnation in off-the-shelf application sales comes in the form of the survey results for Oracle and SAP, which scored 6% and 8% respectively.

“Packaged application vendors such as Oracle/PeopleSoft, SAP and Siebel can expect only single-digit increases over the next 12 months,” he notes.

In the hardware stakes, HP, IBM, Dell and Cisco emerged as winners, with 26% of respondents vowing to spend more with HP, 21% with IBM, 21% with Dell and 19% with Cisco.

Higgins notes “hardware spending is focused on a few commodity vendors” and says the survey indicates that savings through hardware rationalisation are seen as a way to free up budget for other IT spending.

Also pushing the four hardware vendors nominated for big spending increases is an indication of greater spending on storage and server hardware, with 40% and 43% of respondents indicating budget increases in those two areas.

There was one seeming anomaly in the survey: 53% of respondents indicated they would spend more on security-related software this year, with 22% indicating they will spend more on packaged security apps.

However, in the “which vendors are you going to spend money with” section of the survey, only 2% said they will spend more with Symantec and CA, another major security software vendor, also got a 2% response.

Higgins attributes the difference to the fact that antivirus, antispam and antispyware software is now regarded as a commodity and won’t see much extra spending beyond regular updates and relicensing.

The growth in security software spending is going to come at the network level, he says, with Cisco being a primary beneficiary. When the network perimeter is secure, security spending will then shift to areas such as identity management.

Other results from the survey include that 33% of Australian and New Zealand respondents expect increases in their IT budget this year and that the proportion of IT budgets devoted to new investment will rise slightly from previous years.

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