Security Top IT Spending Priority

A recent survey of 100 IT executives predicts that IT spending will decrease slightly in 2006 as more businesses worry about global economic conditions, but security software and enterprise IT upgrades remain top concerns, according to Goldman, Sachs & Co.

Macroeconomic factors such as high oil prices and a devastating hurricane season in the U.S. have caused 40 percent of the executives surveyed by Goldman to consider reducing their 2006 IT budgets, according to survey results released Friday. Most executives, 52 percent, believe their IT spending will be unchanged in 2006 as compared to 2005.

Security software has been a long-running priority among the executives on Goldman’s survey panel, and nothing has changed that mindset based on the current results. Spending on antivirus products has eased up after a flurry of activity, but chief information officers (CIOs) continue to focus on improving security in areas like identity management and regulatory compliance, the survey said.

Other enterprise software priorities include ERP (enterprise resource planning) software and CRM (customer relationship management) software, with CIOs upgrading those two categories to top priorities. When Goldman polled its panel in April of this year, ERP and CRM software were only considered medium priorities.

Among enterprise software vendors, VMware Inc. and SAP AG were the two most-cited companies that are receiving an increasing percentage of the respondents’ IT budgets. Virtualization technologies are a hot topic this year as Intel Corp. and Advanced Micro Devices Inc. prepare chips that improve the performance of virtualization software. On the downside, respondents listed Novell Inc. and CA Inc. as receiving less of their IT budgets.

When it comes to choosing hardware for their new software, IT executives listed servers using Microsoft Corp.’s Windows OS as a top priority, an upgrade from the April survey. Unix servers also received an upgrade in the latest survey, but they are only considered a medium priority among Goldman’s respondents.

Dell Inc. and IBM Corp. are receiving larger shares of IT budgets, according to the panel. Goldman suggested that given Dell’s financial results from the past two quarters, aggressive discounts may have played a role in Dell’s performance among respondents. Hewlett-Packard Co. (HP) is losing its share of respondents’ IT budgets, but Goldman expects the company’s performance to improve over the next year.

Dell also is gaining share in the PC portion of respondents’ IT budgets, while HP is losing share. Goldman attributed HP’s performance to increased discipline about the markets in which it participates. Lenovo Group Ltd. neither gained share nor lost share among the survey respondents, an improvement from the previous survey conducted soon after Lenovo completed its acquisition of IBM’s PC business.

On the sensitive topic of outsourcing, 24 percent said they expect their interest in paying someone else to manage the data center or desktops to increase. With economic conditions on the minds of IT executives, reducing their costs by outsourcing these functions is expected to become more popular, according to Goldman.

Fifty-three percent of Goldman’s survey respondents hold the title of CIO, while 22 percent are vice presidents of IT or IS and 15 percent are directors of MIS or IT. Eighty-two percent of the respondents work for companies that have yearly revenue of US$500 million or greater, and 52 percent of the companies have more than 10,000 employees worldwide.

By Tom Krazit, IDG News Service