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FOR IMMEDIATE RELEASE

Technology Spending By Large Companies Will Drop By An Average Of 14 Percent In 2002, According To Forrester Research

Cambridge, Mass., April 1, 2002 . . . Spending on eBusiness technologies will drop from an average of 3.5 percent of revenue in 2001 to 3.0 percent in 2002. Based on a Forrester Research, Inc. (Nasdaq: FORR) survey of nearly 900 high-level IT and business decision-makers at Global 3,500 firms, average 2002 eBusiness technology budgets are $29 million compared with $41 million in 2001. The survey also revealed that business executives expect a more significant drop in spending than their IT colleagues do.

"Most companies will curb the number and types of technology products that they will consider buying in 2002," said Tom Pohlmann, senior analyst at Forrester. "Compared with 2001, companies are much more risk-averse when considering new technologies, opting to make do with what they have before buying more."

Compared with last year, 23 percent fewer firms will consider purchasing the nuts and bolts of server, network, and storage hardware. Meanwhile, fewer than half the firms will consider purchasing enterprise application software like CRM, ERP, supply chain, and procurement in 2002.

Additional Key Findings

  • Sixty-one percent of Global 3,500 firms will consider purchases of hardware, software infrastructure, or network bandwidth in 2002.
  • Only 26 percent will consider purchasing enterprise apps -- CRM, ERP, procurement, or supply chain -- which is down from 58 percent last year.
  • The number of firms considering purchases of technology consulting and implementation services fell 28 percent from last year, although demand remains healthy in insurance, finished goods manufacturing, and utilities.
  • Sixty-five percent of manufacturing firms are either considering or piloting enterprise application integration (EAI) -- the highest of any industry.
  • One in five companies named a services division of a software company as one of their preferred service partners. IBM was the runaway leader as a preferred consulting and implementation service provider.
  • Compared with last year, technology buyers are more likely to give business units influence over technology strategy and direction.
  • Midsize firms actually lead their Global 3,500 counterparts in rollouts of voice over IP and wireless LANs, while Canadian firms lead their US counterparts in adoption of PDAs, supply chain software, and enterprise portal technologies.

    "Our survey also found that Global 3,500 executives estimate their online-generated 2002 revenues at 7.3 percent of overall corporate revenues, compared with 5.7 percent in 2001. They also estimate that in five years, online revenue will comprise 20 percent of total corporate revenues," added Pohlmann. "Despite the economic downturn, companies still believe that technology will make a huge difference in driving business results."

    Forrester Research is a leading emerging-technology research firm providing data and analysis that defines the impact of technology change on business. Forrester's WholeView™ Research, Strategic Services, and Events help Global 3,500 clients understand how technology change affects their customers, strategy, and technology investment. Established in 1983, Forrester is headquartered in Cambridge, Mass. For additional information, visit www.forrester.com.

    Contact:

    Mariko Zapf
    Manager, Public Relations
    Forrester Research, Inc.
    +1 617/613-6255
    press@forrester.com

    		•

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