November 4, 2003 4:03 PM PST

Survey: Some IT segments on the rise

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Information technology spending in several industry sectors is gaining momentum, in particular customer relationship management software, according to a survey released Tuesday.

The Wendover-Global Insight survey, which interviewed 30,000 executives with information-technology purchasing power, found that CRM spending nearly tripled in the third quarter compared with the same period last year. However, the overall IT spending index declined 7.5 percent in the third quarter compared with figures from a year ago. The survey's index values measure change in spending from one period to the next.

"Over the last couple of quarters, companies are finally increasing their net income from cost cutting, so they're turning their attention to improving revenues. CRM, theoretically, is one of the only technologies designed to generate revenues. Network services, no. Hardware, no. Operations software, no," said Larry Dillon, chief executive of Wendover, an IT research and marketing company.

He also noted that Microsoft recently came out with a CRM product, and its marketing has created more interest in CRM.

The survey was based on projected IT spending during the next six to nine months in 23 product and services categories.

Data warehousing and management posted a 15 percent increase in its index value during the third quarter, according to the survey.

"As we come out of a bad economy, data warehousing has maintained companies' interests because it's a must buy. We need data warehousing as we gather more and more data and need places to store it," Dillon said.

The index value of consulting services posted a 28 percent improvement over last year, according to the survey. That figure was driven by the foreseen need to hire consultants to install CRM software and other technologies as the economy improves, Dillon said.

Other IT sectors did not fare as well in the third quarter. Network equipment and network services posted double-digit declines of 52 percent and 34 percent, respectively.

"Networking equipment, in a lagging fashion, is tied to employment growth or decline. The number of people you have affects the number of nodes you would need," Dillon said. "We have gone through massive layoffs over the last couple of years and there are a lot of companies shutting down, so there's a lot of excess capacity lying around."


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