IDC: Internal Investment Priorities to Drive 2004 Services Spending

Focus on internal organization structure, relationships with external constituents, processes

Focus on internal organization structure, relationships with external constituents, processes

Framingham, MA — May 26, 2004 — A new survey of 100 senior executives by market intelligence and advisory firm IDC revealed that the decision to invest in external information technology (IT) services and business services in 2004 will be predominantly based on internal factors, including strategic priorities, business objectives and business problems.

In addition, the U.S. economy, with its strong impact on corporate profits, is also an important driver with the potential to inhibit services spending should the economy stall in 2004.

Finally, the survey revealed that 63 percent of the participants' existing contracts will end in 2004, suggesting a market ripe for contract renewals and possible vendor shifts.

"These drivers and the differing ways companies will react to them create strong and shifting undercurrents that vendors must navigate to compete successfully in 2004," said Maryanne Coughlin, director of Model and Forecast Management for IDC's Services Industry Research Group. "Vendors with a core competency of uncovering and analyzing business problems should emphasize this capability, while all others should develop their skills in this area."

The following key survey findings are also presented in this report:

* The highest priority business problems in 2004 include internal organization structure, relationships with external constituents, and duplicative or inefficient processes

* The top business objective for 2004 is to increase revenue by focusing on core competence

* The fact most likely to accelerate the timing of spending on external services in 2004 is new business pressure

The IDC study, "Services Spending Intentions: Factors Influencing Executive Decisions in 2004," examines the 2004 IT services and business services spending intentions of 100 C-level executives at large, U.S.-headquartered companies. It explores the executives' self-reported drivers and inhibitors of planned spending investment decisions.