Study: Security Still Top IT Spending Priority

A recent survey of 100 IT executives predicts that IT spending willdecrease slightly in 2006 as more businesses worry about globaleconomic conditions, but security software and enterprise IT upgradesremain top concerns, according to Goldman, Sachs & Co.

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

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

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

Among enterprise software vendors, VMware Inc. and SAP AG were the twomost-cited companies that are receiving an increasing percentage of therespondents’ IT budgets. Virtualization technologies are a hot topicthis year as Intel Corp. and Advanced Micro Devices Inc. prepare chipsthat improve the performance of virtualization software. On thedownside, respondents listed Novell Inc. and CA Inc. as receiving lessof their IT budgets.

When it comes to choosing hardware for their new software, ITexecutives listed servers using Microsoft Corp.’s Windows OS as a toppriority, an upgrade from the April survey. Unix servers also receivedan upgrade in the latest survey, but they are only considered a mediumpriority 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 financialresults from the past two quarters, aggressive discounts may haveplayed a role in Dell’s performance among respondents. Hewlett-PackardCo. (HP) is losing its share of respondents’ IT budgets, but Goldmanexpects the company’s performance to improve over the next year.

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

On the sensitive topic of outsourcing, 24 percent said they expecttheir interest in paying someone else to manage the data center ordesktops to increase. With economic conditions on the minds of ITexecutives, reducing their costs by outsourcing these functions isexpected to become more popular, according to Goldman.

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

By Tom Krazit – IDG News Service (San Francisco Bureau)