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Study shows surprising
IT spending increase

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More companies plan to increase their fourth-quarter budgets for information technology than intend to reduce their IT spending, according to a surprising report by a unit of trade publishing giant Ziff Davis Media Inc.

More than 400 IT executives were surveyed after the Sept. 11 terrorist attacks, and about 22% said they were planning to increase their IT budgets, while about 17% said they would decrease IT spending in the fourth quarter. The remainder said their budgets would remain the same.

Titanic shifts are under way in the computer technology market, according to Ziff Davis Media Market Experts Group, New York, which issued the report. The business unit collects data

from a variety of information services, extrapolates the data and advises corporate clients
on strategy.

Among the sectors expected to boost their IT spending in the fourth quarter are security and health care companies, said Michael Perkowski, VP-general manager of Ziff Davis Media Market Experts Group. On the other end of the spectrum, major telecommunications corporationshistorically among the biggest IT spendersare laying off personnel and reducing spending.

"Spending patterns were more positive than people might have expected after Sept. 11," Perkowski said. "Different pockets of manufacturing are also still looking pretty good, and real estate is looking good."

The way those industries are investing also is noteworthy, he said. The survey results indicate significant gains in spending for security systems, encryption and data storage.

John Goodman, a spokesman for CompuDyne Corp. in Hanover, Md., said his security company is experiencing incredible demand for its rugged equipment enclosures and doors that can withstand very strong blasts. Formerly, the companys major customers were U.S. embassies, but now theres growing demand from an array of companies and public agencies, Goodman said.

CompuDyne also notes increased interest in its data linkage system that can be used by emergency relief agencies to make data consistent throughout channels, Goodman said.

"We have police, emergency medical service and fire department technology that can be easily adapted to hunt terror," he said.

Air Security Inc., a Houston-based security and intelligence company, has seen a jump in demand for its services, said Charlie LeBlanc, managing director. Many companies are updating crisis-management plans to reflect new threats, and theres more demand than ever for the companys protection services for executives, he said.

"We are expecting double-digit growth over the next six to nine months," LeBlanc said.

There should be a burgeoning effect from the increased spending on security products and services, Perkowski said, because new storage, encryption and other security products require new operating systems, hardware and servers.

"Initially, were going to see lower spending on desktop computers," Perkowski said. "Were seeing increased spending in security, whether it is virtual private networks, intrusion software, content censors or communications infrastructure. The idea is to harden the corporate environment to withstand the risks of hacking but also [provide] physical security."

Software vendors that sell individual applications for customer relationship management had seen orders decline even before Sept. 11, noted Dale Hagemeyer, senior analyst in the CRM practice of Gartner Group. Since then, corporate buyers have been scrambling to find exactly the right individual applications to provide such critical services as disaster response and security, he said.

"Whats happened since Sept. 11 is that best-of-breed software companies have been given a reprieve," he said. "If you have a $50 million project over three years for CRM on the drawing board, it just got a lot easier to justify only buying a couple of applications to address your needs right now. It is like refinishing a house. At the outset, you plan to finish the main floor and the basement. But now that times are tough, you just do the upstairs.

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