Strong software spending tipped for 2010

4 Aug 2009

While IT budgets are being driven downwards, organisations will nevertheless plan to increase their software budgets by on average 1.53pc in 2010, according to Gartner.

Gartner surveyed approximately 1,000 IT professionals worldwide during April and May 2009. Respondents were asked whether they expected their 2010 IT budget to be below, be the same as or exceed the IT budget for 2009.

Thirty per cent of companies in Asia/Pacific, 28pc in North America, and 25pc in Europe, Middle East and Africa (EMEA) said they expected their 2010 IT budget to increase.

With regard to spending expectations for software by region, North America is still expected to decline 2.06pc, and EMEA is only slightly positive at 0.45pc for 2010 compared with 2009. Software budgets in Latin America will rise 2.54pc, and in Asia/Pacific, software budgets will increase 4.34pc, showing a very positive trend in increasing their software spending in 2010.

Gartner analysts said this is a reflection of the relative maturity of the markets. Generally, the survey found software spending to be holding ground, and consequently, Gartner recommends that vendors work toward helping clients know where they can cut costs and better utilise resources to allow new budgeted dollars to go further.

“Software vendors should continue to build, fund and invest in software sales and marketing programs, even during tight market conditions to maintain customers and expand revenue opportunities,” said Joanne Correia, managing vice president at Gartner.

“A market downturn is a disrupter that creates great marketing and sales opportunities for organisations prepared to take advantage of the right products, marketing programs and funding.”

Vendors will also need to improve on their abilities to strengthen relationships with IT and lines of business, build trust, and deliver true business-enhancing results.

Gartner urged vendors to align go-to-market functions with the maturity of the demand. Tactics in an emerging or high-growth software market are not appropriate in consolidating or maturing markets.

“Vendors need to use a consultative selling approach to understand and then address the most critical needs of IT and the business of their current and prospective clients,” Correia said.

“Software vendors also need to develop a stronger presence through partnerships or an extended sales force in emerging markets where higher budget increases are expected.”

Correia advised software vendors not to use the current economic market as an excuse to scale back on their service offerings and said that vendors need to be able to differentiate with key integration technologies, vertical-market and line-of-business solutions, and diversified customer bases.

Analysts said that although infrastructure spending (telecom, networks, PCs and help desk, and their maintenance) still accounts, on average, for 37pc of the IT budget, savings in the infrastructure area are being used to fund “frontier applications” that drive innovation and provide competitive edge.

“Frontier applications make major changes in business performance possible, such as leveraging the internet for new delivery channels or using web-based technology to improve self-service capabilities,” Correia concluded.

“Such applications are becoming increasingly essential in today’s competitive business environment.”

By John Kennedy

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years