Spending on the rise

By Sharon Gaudin, Network World |  Business

A growing reliance on e-business is pushing nearly half of large companies to invest more heavily in their network this coming year, according to the 2001 Network World Spending Survey.

Despite reports of an increasingly softening economy, the survey respondents say the average network budget will ring in around US$550,000, up 9.9 percent from 2000. So, while a slowing economy may be making IT managers more cautious about taking on new projects or making major purchases, it's not fully applying the brakes to much of anything.

We conducted the annual survey to find out how much you plan to spend on network products and services this year. Working with research firm STAT Resources, we e-mailed a random sample of Network World readers in late November and asked them to participate in an online survey hosted in a private area of Fusion.

The results show that 2001 will be an active year in terms of network spending, at least for the bigger companies. A detailed analysis found that nearly half of companies with the largest budgets - $500,000 and up -- predict they'll spend at least 11 percent more than they spent in 2000, and almost one-quarter of them expect to spend an additional 25 percent. And the budget increases aren't just confined to major corporations: 40 percent of firms with midsize budgets are predicting an 11 percent increase.

Not everyone will realize such impressive gains, however. Almost half the respondents predicted either no change or modest increases of 10 percent or less in 2001.

Still, the network budget picture is slightly better overall than it was last year. Spending increased 9.5 percent from 1999 to 2000, and now it's climbing again by a similar amount.

"This is really good news," says Richard L. Ptak, vice president of e-business infrastructure strategies at Hurwitz Group Inc., a high-tech analyst firm in Framingham, Mass. "It shows a bit of a turnaround from what was happening in Q3 of 2000 when there was a lot of uncertainty about the money companies were going to be committing to [spending]. There was a lot of talk of companies sitting pat for 2001."

Companies with the biggest budgets are looking to invest in capital equipment and projects such as e-commerce, video conferencing and security. Meanwhile, firms with small and midsize budgets are sticking to the basics, targeting their spending on network hardware such as hubs, routers, firewalls and servers.

Almost half the respondents, or 46 percent, say their budget is about right for accomplishing the tasks on their plate. Close to one-third (32 percent) call their budgets somewhat inadequate, while only 4 percent say their budgets are more than adequate.

With companies planning to spend more this year coming as a pleasant surprise for Ptak, he's not surprised that the extra funding is earmarked for network equipment and services.

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