Conspectus Direct Newswire

Issue 3

30 January 2003

This issue is sponsored by:

CAPITA IT SERVICES, FUJITSU SERVICES and IIR-CONFERENCES

This issue agenda

1. Services Update: IBM shows IT services is still the place to be
2. Research Today: Users focus on application integration
3. Buyers' Analysis: IT managers wrestle with wireless
4. News Analysis: IT spending inches forward
5. Market Opinion: HR systems back on the shopping list
6. Further information - feedback/forward to a colleague/unsubscribe

Sponsor

CAPITA IT SERVICES

Capita IT Services provides end-to-end technology services and solutions, our aim being to enhance or transform our clients' organisation and services. We are a major division of the Capita Group plc, one of the UK's largest and fastest growing professional support services organisations, with over 17,000 people and forecasted revenues for 2002 of £895m.

For more information about Capita IT Services please visit the website by clicking here.or contact us at its-sales&marketing@capita.co.uk

1.** SERVICES UPDATE **

By leading IT industry watcher Sarah Underwood.

Despite the downturn, services remains a healthy element of the IT industry, judging by IBM's latest financial results. IBM's services business continued to grow last year, ahead of its traditional hardware and software operations.

The company's Global Services division achieved revenues of $36.4 billion in 2002, an increase of 4% on the previous year. Hardware revenues for the year were down 10% at $27.5 billion, while software revenues grew 1% to $13.1 billion.

In total, IBM's net profit fell more than 50% to $3.6 billion last year, on turnover down 2% at $81.2 billion. Turnover included contributions from PwC Consulting, which IBM acquired in October 2002 at a cost of $3.5 billion.

IBM chairman and CEO Sam Palmisano says that the integration of PwC Consulting is on track, and that IBM is seeing "substantial benefit" from the acquisition as Global Services gains market share.

2. ** RESEARCH TODAY **

PMP's Research division has polled consultants and systems integrators (CSIs) on the latest IT buying trends. PMP Director Neil Ferguson reports.

CSIs are reporting most demand at this difficult economic time for ERP, outsourcing and to a lesser degree CRM systems. And the sectors spending money are the public sector, financial services and energy and utilities. But generally economic constraints have led to a focus on integration of existing systems around middleware, rather than their replacement.

Government sector work has supported many consultants and vendors during a particularly tough year. Central government continues to apply considerable pressure on local authorities and government departments to comply with its e-government directive and has allocated £350 million to support councils in meeting the 100% ESD (electronic service delivery) target by 2005.

CRM continues to be the main application area that consultants are looking to exploit. But it is questionable whether this activity equates to new licence sales: consultants are more likely to be engaged in helping clients get some return on previous investments in CRM systems.

CRM, however, is a business solution that will sell both in boom times and during downturns for different reasons. When market conditions are favourable companies will invest in CRM solutions to identify and exploit new markets and customers, while in more difficult conditions the imperative is to retain and derive optimal value from existing customers.

Similarly, outsourcing activity has been one of the few boom areas over the last 12 months as businesses have been doing less strategic investment and more releasing of much needed capital. From the consultants' perspective, clients have been increasingly involved in retrenchment and focusing on core business. Consequently, outsourcing has become one of the key areas for cost reduction within the customer base.

But the key priority for clients now is to achieving meaningful integration of business applications which may have previously been purchased speculatively in more favourable economic conditions. It is principally for this reason that clients are seeking assistance from CSIs.

Sponsor

FUJITSU SERVICES

Fujitsu Services designs, builds and operates IT systems for customers in the financial services, telecoms, retail, utilities and government markets. Its core strength is the delivery of IT infrastructure management and outsourcing across desktop, networking and datacentre environments, together with a full range of services, from consulting through integration and deployment.

For more information, visit the website. Click here.

3. ** BUYERS' ANALYSIS **

Julie Welch reports on PMP's regular research into the buying intentions of thousands of UK companies.

Wireless and mobile technology projects continue to appear with predictable regularity on the 'To Do' lists of many IT directors. However, the pressing issue appears to be what exactly they are 'to do'!

There is an understanding that technologies in this area can offer significant benefits to businesses across the board. But the concerns emerge with what exactly these benefits are, and how best to achieve them - with permeating concerns regarding lack of security and interrupted connectivity to worry about as well.

Wireless/network and mobile companies do not help by bringing out new offerings at a blinding rate, without ever clearly explaining just what these products can be expected to achieve and how they can be implemented across the enterprise.

There is a fear that after investing a large amount of time and money in projects in this area, in a year's time your systems will be outdated, and have been replaced by something completely different.

Companies expect an increase in employees working from home to reap the benefits of flexi-working and reducing office overheads. The resulting demand to communicate and share information via a variety of means while either at home or travelling, means that the need for solutions has never been greater. Bluetooth and Blackberries, while sounding sexy in theory, don't actually signify much in practice outside the rarefied atmosphere of the IT industry.

Sponsor

IIR-CONFERENCES

OUTSOURCING IN TELECOMS
24-25 March 2003, Belgium

Evaluate the real business case for outsourcing in telecoms and optimise your strategy to fully exploit the commercial, financial and operational benefits.

Click here for conference website

4. ** NEWS ANALYSIS **

Update by Sarah Underwood.

Spending on IT will inch forward this year, but will remain well adrift of the 10-12% annual growth rate of the 1990s, according to surveys by investment banks Merrill Lynch and UBS Warburg.

Some growth can be expected, although the banks do not agree on how much.

Based on a survey of 100 chief information officers across Europe, Merrill Lynch suggests average IT budget growth will be just 0.8% this year. Research by UBS Warburg among 50 US and 35 European global corporations found expected IT budget growth of about 4%.

Merrill Lynch said 43% of its respondents anticipate software spending will be flat compared to 2002, with 36% saying hardware will be top of their wish-lists. Some 42% of chief information officers have no plans to outsource major operations, despite the fact that 41% have extracted price reductions from their IT services suppliers over the past six months.

Results from UBS Warburg's research suggest that companies are more likely to spend money on storage, servers and networking this year, and are less likely to spend on operating system upgrades and ERP solutions.

Looking beyond 2004, the UBS Warburg panel suggest that annual IT budget growth of around 6% will be sustainable.

5. ** MARKET OPINION **

Pat Sweet presents the results of Conspectus' recent survey among HR technology users.

Many organisations are dissatisfied with their current HR systems, with half (52%) of the companies polled in a recent Conspectus survey claiming their software is performing below expectations.

But most have plans to do something about this - since 44% intend to replace their HR applications in the near future and 36% will be introducing upgrades.

Integration issues, cited by 56%, top the list of requirements when choosing new software, followed by improved functionality (46%) and ease of use (also 46%).

Looking to the future, two-thirds of companies (66%) want to internet-enable their various HR activities and processes, mainly in order to improve service levels and data accuracy. And though only 14% of the sample have already implemented self-service HR facilities, around half (52%) indicate that they intend to do so shortly.

However, interest in using hosted HR applications from ASP providers is unlikely to take off as quickly. Just 14% are using an ASP currently, and only 12% are considering such an option compared to the two-thirds (66%) who have no plans to do so.

The annual Conspectus report on HR management systems is based on interviews with 50 companies from a variety of industry sector and with turnovers ranging from £10 million to £1 billion plus.

6. FURTHER INFORMATION - FEEDBACK/FORWARD TO A COLLEAGUE/UNSUBSCRIBE

• For more information or if you have any feedback on Conspectus & ITSS Direct, please email editor@pmp.co.uk
• If you have found this newswire informative, please inform a colleague so they can register
• To unsubscribe from Conspectus & ITSS Direct, simply send a reply to conspectus&itssdirect@pmp.co.uk. In the BODY of the message please type Conspectus & ITSS DIRECT UNSUBSCRIBE

Please visit http://www.pmp.co.uk to view any of these publications, all of which are fully searchable and represent thousands of pages of information relevant to the consultant community.

Publications include:

Conspectus

IT Services & Solutions

Copyright 2008 Prime Marketing Publications Limited.