Cautious Optimism Will Define Second Half of 2009 for Communications Industry

Yankee Group predicted 2009 would be a watershed year for the communications industry. After six months of economic anxiety, declining consumer confidence and widespread industry pessimism, Yankee Group expects communications spending to tick up in early 2010. Recent Yankee Group survey data supports this, with 68 percent of respondents planning to maintain or increase spending in the next three months.

A new report, "Yankee Group’s 2009 Predictions . . . Reloaded," revisits Yankee Group’s top 10 predictions for 2009 to explore the remarkable changes that have already taken place and provide an outlook for 2H 2009 and beyond. Highlights of the predictions include:

--Wired switch port sales will decline for the first time in history. Wireless LAN (WLAN) is transforming into a primary source of connectivity for many enterprises. In 2006, 57 percent of enterprises offered WLAN access in the office. Yankee Group survey data reveals that number has jumped to 89 percent in 2009.

--Sunny skies are ahead for cloud computing. Cloud computing continues to grow as enterprises seek zero-capex solutions. According to a recent Yankee Group survey, more than 75 percent of IT decision-makers are considering a SaaS application for customer relationship management or sales automation.

--Desktop virtualization will replace PC replacement. New Yankee Group survey results show that 64 percent of enterprises currently have some form of a production deployment of desktop virtualization. This is a dramatic shift from 2008 when Yankee Group surveys revealed only 10 percent had the technology deployed.

More information on the IT industry can be found at www.supportindustry.com

Contact Center Workforce Optimization Grew by 14 Percent to $2.7 Billion in 2008, Outperforming Most IT Sectors

DMG Consulting LLC, a provider of contact center and real-time analytics market research and consulting services, has published the 2009 Quality Management/Liability Recording (WFO) Market Share Report.

The Quality Management/Liability Recording (Workforce Optimization) market grew by 14 percent, from $2,389.1 million in 2007 to $2,724.3 million in 2008. The contact center segment contributed 4.3 percent, growing from $1,019.3 million to $1,062.8 million. While this growth rate is more modest than in prior years, the WFO market is outperforming many other IT software markets. DMG Consulting attributes this growth to increased spending on security, risk and liability avoidance, and cost reduction.

Contact centers use recording to capture agent/customer call and screen activities for liability, verification, quality assurance, and to feed into analytics applications. Enterprise use of recording is growing; the traditional uses are for contact centers, trading floors, first responders and air traffic control. In recent years, recording has expanded to address video surveillance solutions (video-based recording and analytics) to protect buildings and infrastructure and branch/back-office communications and activities. Enterprise use of recording will broaden as companies discover more ways to use it to minimize their exposure to risk and reduce operating expenses.

"One of the more interesting things in 2008 is that the growth of the QM/recording (WFO) market was largely organic. We didn't have any large-scale acquisitions or anything that really shook up the market. What we did have are vendors who continue to provide high-value applications that help end users solve the problems that plague them -- security, risk, liability, quality and cost reduction," said Donna Fluss, president of DMG Consulting. "Also interesting is that the market hit the tipping point for IP-based solutions, as these sales accounted for 61.4 percent of the market. This is a significant change from 2007 when the mix was close to 50/50."

DMG does not expect 2009 to be a great year for sales of WFO solutions because many banks and investment firms are still trying to recover from the impact of the recession and, as a result, are making only essential investments. Despite the trying times, DMG expects the WFO market to grow by 2 percent to 4 percent.

IT Hardware Spending Continues to Grow in Emerging Markets

IT hardware spending growth rates among large organizations in emerging markets will surpass those of mature markets in 2009, according to a survey by Gartner, Inc. Despite the economic downturn, 84 percent of these organizations did not cancel any IT projects since October 2008. Furthermore, IT hardware spending in emerging markets is expected to increase for servers, storage, virtualization, cloud computing and green IT.

Survey respondents were asked a series of questions regarding their annual expectations for enterprises in 2009, including if budgets would increase or decrease in various technology segments. The survey results showed 66 percent of respondents said there would be no change, or an increase in IT budgets in 2009

Thirty-five percent of respondents said they would increase investments in virtualization, 32 percent said there would be increased investments into green IT, and 7 percent would invest more in cloud computing.

Gartner has identified several reasons why large enterprises in emerging markets are showing this level of confidence. First, in many of these economies, these organizations have IT plans in place that include equipment renewal and a clear picture of their total cost of ownership. Secondly, these organizations, which represent anywhere from 8 percent to 12 percent of the business pyramid in many of these countries, have larger financial resources and rely less on lending to cover their IT operations than in midsize and small enterprises. Third, these large entities have a clear picture of their role internationally as many are involved in exports and therefore need to have the best technology tools to compete on a worldwide basis.

Inroads by virtualization in the server space are becoming more visible in emerging markets as virtualization is now viewed as a critical component in the cost-saving strategy of large organizations. Although emerging markets are at the initial curve of adoption in green IT, Gartner said that its adoption will become mandatory due to increasing legislation because of the specific needs and energy challenges facing many emerging countries.

Cloud computing is a new IT delivery model in emerging markets, and while it is gaining momentum, the survey revealed that about 50 percent of organizations in emerging markets have not heard of cloud computing or have heard the term but don't know what it means. However, in markets like Brazil, 28 percent of channels are already delivering software as a service.

The survey also found that enterprises are focusing their investments on data management with storage and server and audio/video/Web conferencing as the top priorities. Voice over IP also reached a prominent position with respondents as landline and cell communications continue to be generally expensive in emerging markets while Internet connectivity and broadband expansion keep dropping in price and increasing in efficiency.

More information on the service and support industry can be found at www.supportindustry.com

IT Professionals In Emerging Asia Region Are The Most Optimistic About 2009 IT Budget Growth In New Survey

IT professionals in the Emerging Asian countries of China, India, and Vietnam are the most optimistic about IT budgets this year, with 19 percent of respondents expecting to increase their tech spending in 2009, followed by Latin American IT professionals at 12 percent, according to a new survey by Forrester Research, Inc. The survey of more than 1,400 IT executives and technology decision-makers located in Asia Pacific, Latin America, Middle East, and Africa is Forrester's inaugural study of businesses' technology adoption plans and priorities across all of these regions.

IT budget plans differ significantly across industries in Emerging Asia, with the largest increases being in the public sector (34 percent) and utilities and telecoms (24 percent) and the smallest increase in the manufacturing sector (9 percent).

Other key highlights of the survey include:

-- Asia Pacific and MEA/Russia are the current bright spots for SaaS. Of the firms surveyed, 18 percent in Asia Pacific and 14 percent in the Middle East/Africa/Russia have implemented or are implementing software-as-a-service (SaaS) projects. Interest in considering or piloting SaaS projects is highest in the Emerging Asia region.

-- Cloud computing activity is low globally. While Latin America has the highest percentage of firms (14 percent) that have already implemented cloud computing or pay-per-use hosting of virtual servers, 40 percent of firms in the region are not interested, and an additional 23 percent of firms are not familiar with the technology or don't know if they are interested. Other regions reported similar results; Asia Pacific took the top spot, with 52 percent of firms not interested.

-- Latin America is a hotbed of activity around unified communications. Overall, 88 percent of Latin American firms responded that they have an existing implementation or interest in unified communications.

-- Product localization preferences are mixed. The strongest preferences for IT products in local languages are in Latin America (52 percent) and Emerging Asia (39 percent). However, respondents were split in Emerging Asia, with a high percentage (41 percentage) also reporting a strong preference for products in English.

More information on the IT industry can be found at www.supportindustry.com

Worldwide IT Spending on Pace to Decline 6 Percent in 2009

Worldwide IT spending is on pace to total $3.2 trillion in 2009, a 6 percent decline from 2008 spending of $3.4 trillion, according to Gartner, Inc. Continued weak IT spending because of the economic situation combined with the effect of exchange rate movements has resulted in Gartner lowering its 2009 forecast from its 1Q09 projection. In March of this year, Gartner had forecast 2009 IT spending to decline 3.8 percent.

All four major segments of IT -- hardware, software, IT services and telecommunications -- will experience declining revenue, something that did not happen in the 2001 downturn. The computing hardware segment will experience the steepest decline in 2009, with spending projected to decline 16.3 percent. The software segment will show the slightest decrease in 2009, with spending forecast to drop 1.6 percent.

More information on the IT industry can be found www.supportindustry.com

Large and Medium-size Businesses Anticipate IT Growth

Large and medium-size businesses are increasingly planning to invest in IT products and staff as confidence among IT decision makers begins returning to the corporate sector. However, earlier signs of IT investment among small businesses have slipped. In the government sector, federal government IT decision makers are showing an even higher leap in confidence.

Sentiment remains stable across the broader IT marketplace, according to the latest CDW IT Monitor, with gains in some areas balanced by uncertainty among the small business and local government sectors. The overall CDW IT Monitor score across both corporate and government sectors remained flat at 69 for the third consecutive reading.

Signs of anticipated growth in investment that first appeared in the April CDW IT Monitor are now becoming much more visible. Eighty-three percent of medium-size businesses expect to purchase new software in the next six months and 28 percent of large businesses expect to hire additional staff in the next six months, both up five percentage points since April. Additionally, 52 percent of federal IT decision makers anticipate budget increases in the next six months, an increase of 17 percent since April and the largest leap in the government sector to date.

However, this rising sentiment is not shared by all sectors. After signs of increasing confidence earlier in the year, fewer small businesses and local government organizations anticipate budgets to improve. Only 21 percent of small business IT decision makers and 17 percent of local government IT decision makers expect IT budgets to increase in the next six months, down eight and six percentage points, respectively, since April.

More information on the IT industry can be found at www.supportindustry.com