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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Fred Levine who wrote (43244)	3/6/2001 5:39:34 PM
From: Fred Levine	Read Replies (1) \| Respond to of 70976

More from Merrill TechStrat Insight – 5 March 2001 (Continued) 2 IT Budgets Does the Federal Reserve reducing rates affect your IT spending? Yes 3% No 97 Many of you have revised your spending higher in past years. When you do so, do you formally increase the budget or just spend more than planned? Formally increase 70% Spend more 30 The budget process is important. We were a bit surprised that the majority formally changed their budgets when they overspent in recent years. Consequently, Fed actions have little near-term meaning for IT managers because budget changes take time. Is it more likely that you will spend more or less than budgeted this year? More 34% Less 48 Same 18 Is cost-cutting a corporate priority this year? Yes 58% No 42 The past few years, many CIOs spent more than was budgeted coming into the year. That’s likely to change in 2001, with more users suggesting cuts are probable given the import of cost cutting. Europeans were less likely to cut than Americans. Separately, we recently met with a group of CIOs who indicated very recent budget pressure. Oracle said that users were backing off on deals at the last minute. Our last survey indicated about 9% budget growth this year. We expect that figure to moderate to 5-6%. What percent of your budget is people cost? Average: 37% Are you reducing the number of IT employees? Yes 20% No 80 Are you reducing the number of consultants you use? Yes 40% No 60 People, the largest part of IT budgets, is often overlooked. With the CFO looking for cuts, lowering headcount is almost unavoidable. The first to be cut will be consultants, an IT manager’s flex force. Consultants are still needed to execute strategic rollouts, so some are kept on or fees are reduced. Product Growth Indicate whether your spending growth is accelerating, slowing, or staying the same. Windows 2000: Accelerating 66% Slowing 10 Same 24 Windows 2000 was disappointing last year but should do better in 2001. Most companies at least will begin the installation process, which is complicated due to Active Directory. NT Servers: Accelerating 60% Slowing 10 Same 30 NT server growth may be tied to the improved Windows 2000 adoption. Windows 2000 makes even more sense on servers than desktops. Also, the dot-com phenomenon favored Unix, so NT may gain share again. Wireless Products: Accelerating 58% Slowing 8 Same 34 We find lots of interest in wireless with a number of pilots. Still, the technology is considered immature. Corporations are now supporting handhelds for employees and putting in 802.11 wireless networks in offices and even factories. The major wireless spend is likely 2002-03. Interest was greater in the U.S. than in Europe, which is cell phone-centric. Storage: Accelerating 54% Slowing 4 Same 42 Storage looks strong, with the phrase “insatiable demand” often used. Many are just getting started on SANs. Still, even storage is not immune as evidenced by Brocade’s outlook and EMC’s “preannouncement.” Customer Relationship Mgmt Software: Accelerating 52% Slowing 6 Same 42 CRM is tough to implement but a high-growth segment. CRM can be used to save money if a company reduces its call center staff, for example. Analyst Craig Wood does see weakness developing in some verticals. Communications Equipment: Accelerating 50% Slowing 12 Same 38 Comm equipment looks more positive than the stocks are suggesting. Enterprises tend to buy routers and switches along with some optical products.