CIOs are almost evenly split on whether or not they expect the technology market to take an upturn or a downturn in 2002, says a new survey from Millward Brown IntelliQuest. Other findings show that nearly half of all respondents plan to increase their IT spending in 2002, with systems upgrades or systems integration issues the most commonly named reasons for the increase.

Nearly half (49 percent) of executives surveyed said they expect the technology market to experience an upturn in 2002. In addition, 42 percent of respondents say that they expect their IT spending to increase this year over 2001. Of those, 49 percent say the increase will be slight (by 10 percent or less) and 44 percent say the increase will be moderate. Systems upgrade or systems integration issues were the most frequently mentioned reasons as driving the increase. Another commonly mentioned area was security.

In the same vein, those who said their budgets would remain the same in 2002 as in 2001 mentioned that money within that budget would shift and cited systems upgrade or systems integration issues as key drivers.

Forty-four percent think that the tech market will continue to decline in 2002 (as compared to the 49 percent who think it will experience an upturn). As would be expected, those who think the market will continue to slide are significantly more likely to think their company's IT budget will decrease in comparison to 2001. In addition, most who expect those decreases predict they will be moderate.

Perhaps in reaction to the events of the last half of 2001, exactly half of all respondents said that enhanced security tools or services are important enough to their organization to invest IT dollars in this year. Web application server software and application/business integration software were also seen as important enough to snag IT budget money, though less so than security. In addition, executives who think the market will improve in 2002 are significantly more likely than those who think the market will continue to decline to think their company will invest in application/business integration software.

But whether respondents believed their budgets would increase or decrease, they say that the money will be dispersed fairly evenly throughout the year. The Push for More Managed Security Services A dearth of corporate resources and expertise will lead to a boost in demand for managed security services over the next four years, reports International Data Corp., a Framingham, Massachusetts-based research firm. Spending in the U.S. market for managed services will jump from approximately $720 million in 2000 to $2.2 billion by 2005, for a compound annual growth rate of 25.4 percent, IDC projects. The sector also will be driven by a growing complexity of networks and rouge access points, which increase exposure to vulnerabilities and threats, says Allan Carey, senior analyst of IDC's Information Security Services research service. "These factors combined are drastically affecting the way organizations approach risk mitigation," Carey notes. "Customers want information security solutions to seamlessly integrate into the network, ensure scalability and provide a measurable return on investment." Companies in the highly competitive managed services sector include network/systems integrators, service providers, technology owners and pure-play security service firms, IDC says. The most apparent opportunities are in the small to mid-size market where customers have strong security needs, but limited information security skills and capital, the firm notes.

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