Strategic IT Solutions Gathering Momentum, Security is Still Number One Tech Driver

IDC: Large enterprises in the U.S., Western Europe, China and India, business leaders are actively adopting new technology solutions focused on strategic benefits as they move beyond the infrastructure upgrade cycle that has dominated IT budgets since 2003. IT spending priorities for the next twelve months include Business Intelligence, Web-Based Applications and Vertical Industry Solutions.

IT markets are expected to be stable throughout the remainder of 2006, assuming no wild cards or major shifts in the global economic outlook. In contrast with surveys in recent years, a majority of firms expressed a strong level of confidence that budgets would be spread evenly and without disruption over all four quarters. Security still tops the list of overall IT spending drivers, as firms continue to express increased awareness of security risks and available solutions. Although the infrastructure upgrade cycle has passed its peak levels of 2005, the management and optimization of infrastructure remains a key influencer of buyer behavior.

There are some differences across the major regions in terms of the strategic drivers for IT spending increases and budget priorities. The U.S., many firms are shifting to a more strategic view of the business benefits to be derived from the adoption of solutions for real-time business performance monitoring, better managing customer relationships, and enhancing collaboration. In China, it's all about the drive for vertical industry solutions, particularly in relation to back-office applications. Indian firms are moving strongly towards evaluating or adopting Web-based applications, partly driven by security factors in the outsourcing industry and partly by a growing culture of innovation.

In Western Europe, meanwhile, large firms are seen as adopting a steady approach to IT spending and adoption, but lagging the US in most areas of new solutions. European firms in the UK, France and Germany also indicated a persistent policy of good-enough computing, which continues to inhibit the pace of IT spending.

There is a danger that European firms are struggling to compete with strategic innovation from the U.S. on the one hand and low-cost competition from Asia on the other. Overall, the survey results indicate that many European companies remain inhibited by a slightly conservative approach to new investment, although overall spending is expected to increase from 2005. Firms in China, meanwhile, indicated a surprisingly high level of concern over the possible negative impact from an economic slowdown within the next twelve months.

Global Market Watch Survey 2006: IT Budget Trends and Priorities

Publ 230060504