More than half of IT software budgets in 2010 will go toward ongoing operations and maintenance of existing applications as opposed to implementing new software solutions, according to a recent survey by Forrester Research, Inc. (Nasdaq: FORR). The survey of nearly 2,200 IT executives and technology decision-makers at enterprise and small and medium-size businesses (SMBs) in North America and Europe is part of Forrester’s Business Data Services (BDS) series, which helps Vendor Strategy professionals profile their target market’s budget allocation and technology adoption.

According to Forrester’s Enterprise And SMB Software Survey, North America And Europe, Q4 2009, the poor economic environment created a backlog of business application software upgrade activities for firms, and many plan to address the issue this year. Forty-one percent of enterprises and 21 percent of SMBs plan to upgrade existing finance and accounting software, 48 percent of enterprises and 19 percent of SMBs plan to upgrade their customer relationship management (CRM) applications, and 52 percent of enterprises and 18 percent of SMBs plan to upgrade industry-specific software. In addition, more than 20 percent of all SMBs have concrete plans to implement CRM or information and knowledge management (I&KM) software in 2010 or later, representing the fastest-growing SMB software markets in 2010.

“Despite all the hype around new technologies that hit the market in the past few years, firms are devoting most of their IT spending on already-installed technologies,” said Forrester Senior Analyst Holger Kisker, Ph.D. “As long as businesses are prioritizing cost cutting and efficiency improvements, tech vendors must provide clearer business justifications for their offerings and demonstrate the functional fit with business requirements that their solutions provide.”

While cloud computing has many enterprises interested, growth of software-as-a-service (SaaS) applications is driving the market more, and infrastructure-as-a-service (IaaS) is still slow. About one-third of all enterprises have subscribed or plan to subscribe to SaaS applications in the next 12 months. However, this does not mean that one-third of all business transaction volumes are already running on SaaS applications. Rather, it reflects enterprises that use it for any application, most of which are not mission-critical today.

“Many vendors mainly position their cloud services toward SMBs with a belief that they will jump on the bandwagon first because they often have more limited IT budgets than larger enterprises,” said Forrester Senior Analyst Stefan Ried, Ph.D. “Instead, vendor strategists should investigate specific adoption levels by industry, region, or company size to identify their sweet spot for an SMB cloud offering. Large enterprises even adopt some cloud services significantly faster than SMBs.”

Top-line overviews of full survey responses are available in the reports “The State Of Enterprise Software And Emerging Trends: 2010” and “The State Of SMB Software And Emerging Trends: 2010.” Subscribers to Forrester’s Business Data Services receive unlimited data support, including custom segmentation from a dedicated data advisor.

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