IT spending on security, CRM to rise in 2004

With overall IT budgets expected to increase this year, industry watchers are looking for customers to satisfy pent-up demand for software products, in particular those for securing networks and improving customer relations.

Roughly 80% of the 50 big IT shops Merrill Lynch surveyed said their IT budgets will increase by 5% or better from last year and 46% have security products on their shopping list.

“[C]ustomers are beginning to feel more confident in their spending intentions,” the report says. “There is potential for greater levels of spending . . . as organizations strive to enhance their own competitive position.”

IDC analyst Chris Christianson says new attention will be paid this year to secure messaging, unified management (across security, network and systems), regulatory compliance and identity management, among other evolving disciplines, such as application security.

“Protecting networks is not enough,” he says. “Applications are the real targets of hackers, crackers and malicious insiders.”

Christianson predicts this also will be the year that consumers start to “get” security. Products such as anti-virus software and firewalls, and technologies such as malicious code protection, Web filtering and e-mail scanning will see more popularity in the coming months. “More importantly, [consumers will] realize that install and forget is a disastrous security strategy,” he says.

Frank Gens, a senior vice president with IDC, says business goals will become a bigger driver behind IT projects in 2004. “What you’re going to see more of is an IT industry that is trying to wrap itself more intimately around business problems and how to solve them,” he says.

Customers will look to add analytic applications, business intelligence and CRM software to address business strategies, according to the survey. Vendors also will start to build bundled products designed for vertical markets, much like IBM and HP already have begun discussing.

As for CRM software, AMR Research suggests companies this year will invest in customer analytics tools that provide reporting and predictive modeling features to incorporate historic data and improve marketing effectiveness.

With about one in four respondents saying they would not spend any money on systems management products, Merrill Lynch says it expects the big players such as HP and IBM to retain their hold on this market. BMC Software, Computer Associates, Mercury Interactive and NetIQ made the cut of management vendors that customers plan to buy from in 2004.