Wednesday, July 29, 2009

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Software budgets on an upswing: Gartner

Software budgets will increase globally next year, in a clear departure from the downward trend seen this year, according to a Gartner survey.

Although organisations are continuing to lower their total IT budgets this year, software budgets will increase in 2010. The survey showed that organisations plan to increase their software budgets on an average of 1.53 per cent.
Gartner surveyed 1,000 IT professionals worldwide between April and May. Respondents were asked whet-her they expected their 2010 IT budget to lower, remain unchanged or exceed the IT budget for 2009. Thirty per cent of companies in Asia Pacific, 28 per cent in North America and 25 per cent in Europe, West Asia and Africa (EWAA) said they expected their IT budgets for 2010 to increase.

On spending expectations for software by region, North America is still expected to decline 2.06 per cent, and EWAA is only slightly positive at 0.45 percent for 2010 as against 2009. Software budgets in Latin America will rise 2.54 per cent, and in Asia Pacific, software budgets will increase 4.34 per cent, showing a very positive trend.
Sun Microsystem’s regional director (emerging markets) K P Unnikrishnan told Financial Chronicle that the crisis is bottoming out. “Most clients globally have started giving out positive feedback. Many of them started to spend again. But I cannot predict by how much or how soon the transformation will be complete. For some, ‘soon’ could be three years,” he said.

Anand Sankaran, chief executive of Wipro Infote-ch said he expected the bu-dgets to grow by 12-13 per cent in the domestic market by next year. “But that’s still lesser than the 22 per cent growth that was witnessed during the IT heydays,” he said.

Gartner analysts said this is a reflection of the relative maturity of the markets. Generally, the survey found software spending to be the holding ground, and consequently, it recomme-nds 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 shou-ld continue to build, fund and invest in software sales and marketing programm-es, even during tight market conditions to maintain customers and expand revenue opportunities,” said Joanne Correia, managing vice-president, Gartner.

Correia advised software vendors not to use the present 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 and diversified customer bases.

Gartner said that although infrastructure spe-nding still accounts for 37 per cent of IT budgets, savings in the infrastructure area are being used to fund “frontier applications” that drive innovation and provide competitive edge.

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