Encouraging Signs for IT

Aberdeen report shows spending up for Q3 2002, increasing 3.4 percent

Boston, MA  December 17, 2002  Q3 2002 revenue figures for the top 20 information technology suppliers show improvement across the board, compared to Q2 2002, with year-over-year quarterly revenues increasing 3.4 percent, according to research conducted by Aberdeen Group, a leading market analysis and positioning services firm.

"The latest revenue figures exhibit some encouraging signals that IT spending is slowly rebounding," said Hugh Bishop, senior vice president at Aberdeen Group and co-author of the research report, "IT Spending Shows Encouraging Signs." "Growth is not universal, nor is it likely to return to the levels of 19962000 anytime soon. But, as purse strings loosen, technology suppliers that pursue aggressive sales and marketing programs are likely to pick up market share."

Among the key findings of Aberdeen's report are:

" The IT security sector showed particularly encouraging results. Year-over-year quarterly revenues for this group of 28 companies increased 11.7 percent. This result shows improvement over the same metric for Q2 2002, during which revenues increased 8.5 percent.

" Software providers achieved growth by increasing service revenues  not license revenues  during Q3 2002. In fact, application license revenues declined 19.1 percent year-over-year. Although this result is better than the decline of 24.1 percent realized in Q2 2002, application software providers still face an uphill struggle in positioning and closing on new application opportunities.

" The customer relationship management (CRM) application market continued to contract. The CRM benchmark group displayed a total year-over-year quarterly revenue decline of 3.5 percent. However, that result is a vast improvement over last quarter's year-over-year decline of 19.4 percent.

" Application software is a low purchasing priority among IT executives and most likely will not see a broad, sustained turnaround until the end of 2002 or early 2003.

"IT spending has essentially stopped contracting," said James Tsai, a research associate at Aberdeen, and co-author of the report. "If the current trend continues  and Aberdeen field interviews suggest that it will  the IT industry is poised to resume moderate growth."