Modest growth
Surveys by various industry analysts about the IT investments planned for the year show that the IT industry is cautiously optimistic at the start of the new year. Most surveys forecast an above-average increase in spending on software and services in 2004.

• At the beginning of November 2003, market analysts at Gartner Dataquest forecast that IT budgets would grow 3.4% in 2004. They had surveyed 2,000 IT decision-makers worldwide.
• A joint survey by Gartner and SoundView of 600 technology purchasers published in December 2003 showed a more subdued result, with technology spending increasing 1.6%. Top IT decision-makers in the United States showed willingness to invest more heavily in application software in 2004.
• According to IDC’s Worldwide IT Spending Forecast 2004, worldwide IT spending in 2004 will increase approximately 4.5%. This means software spending would grow around 5.7% to US$194 billion. For North America, IDC is forecasting a more moderate 3.9% increase in IT spending in 2004. For Western Europe, IDC assumes IT spending will grow around 2.5%. IDC sees Asia-Pacific Developing, which includes China and India, as a double-digit growth region and forecasts a 14.4% rise in IT spending there. According to IDC, growth in the Rest of the World region should be 10%.
• AMR Research assumes that there will be 7% growth in the area of enterprise software over the next year in the United States.
• A survey of managers responsible for IT at 100 major U.S. corporations shows a definite willingness to increase investment in software in 2004. The survey, which was carried out by Credit Suisse First Boston in November 2003, showed that 54% of participants expected to increase their spending on software solutions.
• EITO forecast 2.2% growth for the IT market in Western Europe. According to EITO, demand is shifting from hardware to software and consulting services. Consequently, it predicts 4.6% growth in the Western European software market over the next year.

Experts predict a number of focal areas
Industry experts believe several solutions and technologies have particular potential for 2004.

• In the last two years, IT spending decisions were primarily guided by concern for cost optimization. Gartner is now recommending that its clients invest strategically in IT to contribute to their business success. Gartner sees the future role of IT as linking previously independent operational processes and management processes. By doing so, companies can speed up their decision-making processes, react more quickly to change, and use their assets more effectively. Of those IT decision-makers questioned by Gartner, 43% said that the future of their IT lies in optimizing business processes. According to 34% of those asked, one of the core tasks of IT is the strategic deployment of business intelligence. Gartner counts Web services as one of the technologies that companies should consider implementing over the next year. Web services are playing an increasingly important role in the transformation of business processes. Gartner expects that, beginning in 2004, Web services will be the main method by which large companies implement and integrate new applications.
• According to estimates by IDC, the worldwide market for analysis software will grow and, by 2007, will reach a volume of US$4.8 billion.
• Studies by IDC and Meta Group show that the CRM market may gradually recover and see stronger growth rates. IDC expects average growth in CRM of 12.9% per year. In an open Internet survey by Meta Group, 75% of participants – mainly employees of large U.S. companies – said that they wanted to invest as much or more in CRM in 2004 as they had in the previous 12 months. The portal solutions market segment, in which SAP has established itself as one of the leading vendors, will develop very positively in 2004, with revenue growth of 150%, according to Meta Group. However, analysts at Gartner expect only 22% growth in this market segment in 2004. The product life-cycle management (PLM) solution market is also likely to experience an upward trend. SAP offers mySAP Product Lifecycle Management (mySAP PLM) in this segment, which will grow 30% per year between 2003 and 2007 according to IDC. In the supplier relationship management segment, in which SAP also operates, IDC assumes growth will be 5.4% in 2004.

IT market expected to consolidate further
The IT industry will probably continue to consolidate in 2004. Smaller software vendors will increasingly function as providers of niche products. According to a study from December 2003, analysts at Gartner have calculated that, within the next two years, over half of the listed IT companies will disappear from the market, which will be dominated by a few large companies.