Survey Shows Spending Shift Away from Security

Survey Shows Spending Shift Away from Security

More than 40 percent of respondents listed consolidation as a high priority for the next year, and just under 40 percent said virtualization is more directly on their radar

IT executives in the next 12 months will be focusing their budget dollars on projects such as server consolidation and network upgrades, as previously high priorities such as security, risk management and compliance fall off their Top 10 lists.

US-based Goldman Sachs this week released its most recent survey of 100 IT managers, and it shows that while budgets remain flat and spending moderately steady, the technologies IT buyers are investing in most heavily have changed. For instance, IT initiatives such as server consolidation and server virtualization jumped from the middle of the pack to the first and third spots, respectively. More than 40 percent of respondents listed consolidation as a high priority for the next year, and just under 40 percent said virtualization is more directly on their radar. The financial services firm predicted the shift when server unit sales stalled last year.

"The big move upward coincides with an increasing number of comments from CIOs about the deployment of virtualization in production and test environments and the recent dislocation between industry-standard server unit and revenue growth," the report reads. But that doesn't mean all equipment makers will see a loss. "We expect blade growth to remain strong relative to stand-alone or rack-mounted servers, highlighted by HP's c-Class offerings, which grew by 45 percent in the January quarter," the firm says, adding that HP beat out its primary competitor IBM in that market.

Another significant advance could mean more money for Cisco. Both VoIP and network upgrades landed in IT decision makers' Top 10 lists, with more than 30 percent planning to invest in voice and another third indicating a LAN or network upgrade would be on the road map in the next 12 months. According to the firm, for every $US1 spent on VoIP gear another $US3 is spent on network upgrade equipment, which can be seen as nothing but good news for the network gear vendors - in particular Cisco.

"Increasing VoIP demand would have positive pull-through effects for Cisco's enterprise network infrastructure business, particularly switching, as well as Cisco's VoIP equipment business," the report reads. "We expect to see significant market share shifts away from Nortel and Avaya to Cisco."

Investments in PC hardware could be driven by a growing trend toward laptop adoption, Goldman Sachs says, but the firm does not credit the release of Microsoft's Vista as the driving factor for about 25 percent of respondents indicating an upgrade in client machines as a top priority. And for software, survey respondents indicated ERP and business intelligence would remain high priorities going forward. ERP landed in the No. 2 position, with more than 40 percent planning projects with it, and more than 35 percent said they were looking into business intelligence software - positive signs for software makers SAP and Oracle, which recently spent $US3.3 billion to acquire Hyperion Solutions.

On the downward slide were security, practically a constant in the top three priorities in recent years, and compliance and risk management, which also fell out of the Top 10 lists probably due to previous work done to get ahead of regulations. Goldman Sachs attributes the slide to mature products and confident buyers.

"A slippage in security may indicate some increased comfort with security issues in the enterprise," the firm writes. "It could also be partially a result of few high-profile security breaches or highly disruptive malware incidents in recent memory."

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