CRM Leads IT Spending Index

A sharp rise in CRM spending is helping to ignite an upswing in IT spending. According to the "Wendover-Global Insight IT Spending Index," released this week, for the third quarter of 2003 IT spending is up 10 percent over the previous quarter. Still, the Index remains just below third quarter 2002 Index levels. The Index measures the intentions of IT decision-makers to invest in new capital projects over the next six to nine months. The index value for CRM is nearly triple for the third-quarter of 2003, compared to the same period a year ago, indicating a steady increase in budget allocations for new installations. The increase in CRM spending was tempered, however, by slightly down numbers for new spending on network equipment and services. Applications and services spending has been a mixed bag. Of the 23 products/applications categories tracked in the survey, half showed a marked decline over last year's spending levels. Only seven categories showed increases in excess of 10 percent over Q3 2002. CRM led the pack, hitting just over 102 on the index in the third quarter if 2003--that's up from 75 for the same period of 2002 and up from 70 in the previous quarter. Larry Dillon, chief executive of Wendover, says that most improvements in the Index come from cost cutting, but CRM increases impact the top line. "CRM is one of the few investment that impact top-line revenue," he says. "And I think it is consistent with the current goals of companies to increase in that area. It also doesn't hurt that Microsoft is out in the marketplace, actively promoting it's CRM solution. You can't ignore that." Data-warehousing and management have ticked up as well, by 15 percent year-over-year. The index for spending on consulting services rose by 28 percent over last year. Other substantial annual increases are seen in maintenance and facilities software (31 percent), manufacturing software (24 percent), and Internet/intranet services (15 percent.). The biggest declines were in personnel software and services. Network equipment was down 52 percent, while network services dropped 34 percent.