Changewave Research: Corporate IT Purchasing Software and Security Survey

ChangeWave Research: Corporate IT Purchasing – Software and Security Survey

ChangeWave Research Report:

Corporate Software & Security Purchasing

Modest Increase in 2005 Software Spending – led by IT Security; Cognos & Salesforce.com Gain Among 2nd Tier Companies

Overview

Recent Alliance surveys have shown signs of a modest uptick in corporate software purchasing, led by strong increases in IT security. This report summarizes a March 30 – April 1, 2005 Alliance survey on corporate spending for software and security. A total of 554 members involved with spending on software/security for their company participated.

(A) Software

· Modest Increase in 2005 Software Spending. A total of 27% of respondents say their company plans to spend more for software in 2005 compared to 2004, while 18% say they plan to spend less. The top reasons cited for a spending increase were “Growth/New Employees” (17%) and “To Improve Productivity” (15%).

· IT Security Software Leads All Categories. IT Security (44%) is the top software category respondents say their company is purchasing in 2005, followed by Data Storage and Management (24%), Application Server Software (20%) and Database Management Software (20%).

· Cognos and Salesforce.com Gain Ground. We looked at small to mid-sized vendors, and Cognos (Net Difference Score = +13) and Salesforce.com (+11) were the two leaders in terms of gained market share in respondent companies in 2005. Business Objects (+6) and Tibco Software (+6) also appear to be gaining share.

· Ariba Losing Ground. On the down side, Ariba (-2) was the software vendor that has lost the most market share among Alliance respondent companies. Progress Software (-1) and Manugistics Group (-1) were also seen as losing market share.

· Company Satisfaction Ratings. When asked to rate their companies overall satisfaction with small to mid-size vendors, respondents gave the highest satisfied ratings to Microstrategy (84%) and Agile Software (80%). At the other end of the spectrum, Vignette (50%) and Progress Software (47%) received the lowest ratings.

· What’s Driving the Purchasing Decision? Better than a third of respondents (36%) say that “replacing outdated existing software” is the top driving force behind their companies’ software purchasing decisions. “An Improvement in business conditions/budgets,” (15%) and “New software Capabilities” (14%) were also cited.

(B) IT Security

· Budget Increases. A total of 58% of respondents say their IT Security software budget increased in 2005. One in five (20%) say it increased more than 10%.

· Anti-Virus Software Spending Leads. The greatest security spending increases were in Anti-Virus Software (Net Difference Score = +40), Anti-Spyware Software (+29) and Spam Filtering Software (+28). On the down side, Disaster Recovery Software/Services (-15) showed the least spending. Surprisingly, spending for Authentication and Identification Software was flat.

· Anti-Virus Software is Also the Top Corporate Priority. Respondents say Anti-Virus Software (21%) is the top security spending priority for their companies, followed by Enterprise/Network Security Software (14%) and Backup/Recovery Software (13%).

· Top IT Security Concerns. The single greatest IT security concern facing respondent companies today is “Protecting their Network Against Attacks,” (27%), followed by Viruses (23%) and Spyware/Malware (17%).

Bottom Line: These survey findings point to a modest increase in corporate software spending in 2005, led by strong IT security spending.

Cognos and Salesforce.com are the leading small to mid-size software vendors gaining market share within member companies, while Microstrategy and Agile Software received the best customer satisfaction ratings.

Anti-Virus software showed the greatest spending increase and ranks as the #1 corporate security spending priority. Not surprisingly, “protecting their network against attacks” ranks as the single greatest security concern facing respondent companies today.

The ChangeWave Alliance is a group of 5,000 highly qualified business, technology, and medical professionals in leading companies of select industries—credentialed professionals who spend their everyday lives working on the frontline of technological change. ChangeWave surveys its Alliance members on a range of business and investment research and intelligence topics, collects feedback from them electronically, and converts the information into proprietary quantitative and qualitative reports.

Helping You Profit From A Rapidly Changing World ™

www.ChangeWave.com

Table of Contents

Summary of Key Findings 4

The Findings 5

(A) Software 5

(B) IT Security 12

ChangeWave Research Methodology 32

About ChangeWave Research 33

I. Summary of Key Findings

Introduction

This report focuses on 2 key areas:

(A) Overall Software Trends

(B) IT Security

II. The Findings

Total Respondents (n = 554)

(A) Software

(1) Question Asked: How would you characterize your company's spending plans for software in 2005 compared to 2004?

We are planning to spend more for software in 2005 compared to 2004 / 27%
We are planning to spend less for software in 2005 compared to 2004 / 18%
There has been no change in spending plans for software in 2005 compared to 2004 / 43%
Don't Know / 11%

Modest Increase in 2005 Software Spending. A total of 27% of respondents say their company plans to spend more for software in 2005 compared to 2004, while 18% say they plan to spend less.

(1A) Question Asked: Why is your company planning to spend more on software in 2005 than in 2004? (n = 127)

Growth/New Employees / 17%
To Improve Productivity / 15%
New Features / 9%
Need-Based/Delayed / 8%
New Hardware/Equipment Which Requires New Software / 7%
To Improve Security / 6%
Consolidation/Integration / 4%
New/Special Project / 4%
Regulatory Requirements (e.g., SOX, HIPPA, etc.) / 4%
To Continue Service/Support / 3%
General Upgrade/Other / 23%

Top Reasons for Spending Increase. Among respondents who say their company is planning to spend more on software in 2005, the top reasons cited for a spending increase were “Growth/New Employees” (17%) and “To Improve Productivity” (15%).

As respondent EGA4355 writes, “We are increasing the number of employees so we need to install new software licenses for them; we are also introducing new services." Respondent INT8321 adds, “To maintain productivity and competitiveness."

A Sample of Alliance Member Responses can be found in Appendix A, page 17.

(2) Question Asked: What types of software will your company be purchasing in 2005?

Security Software / 44%
Data Storage and Management / 24%
Application Server Software / 20%
Database Management / 20%
Network Management / 18%
Business Intelligence and Reporting / 14%
Customer Resource Management (CRM) / 14%
Document and Content Management / 13%
Portal and E-Business Development / 12%
Enterprise Resource Planning (ERP) / 9%
Supply Chain Management/Procurement / 8%
Legacy Platforms / 5%
No Plans to Purchase Software in 2005 / 12%
Don't Know / 11%
Other / 8%

IT Security Software Leads All Categories. IT Security (44%) is the top software category respondents report their company is purchasing in 2005, followed by Data Storage and Management (24%), Application Server Software (20%) and Database Management Software (20%).

(2B) Question Asked: Which of the following vendors is gaining market share in your company this year?

Cognos (COGN) / 17%
SalesForce.com (CRM) / 15%
Microstrategy (MSTR) / 9%
Agile Software (AGIL) / 8%
Business Objects SA (BOBJ) / 8%
TIBCO Software (TIBX) / 8%
Hyperion Solutions (HYSL) / 7%
JDA Software (JDAS) / 7%
FileNet Corp (FILE) / 6%
Webmethods Inc (WEBM) / 6%
Ariba (ARBA) / 5%
Ascential (ASCL) / 5%
Broadvision (BVSN) / 4%
Manhattan Assoc. (MANH) / 4%
Retek (RETK) / 4%
Vignette (VIGN) / 4%
Manugistics Group (MANU) / 3%
Progress Software (PRGS) / 2%
MatrixOne (MONE) / 1%
RightNow Technologies (RNOW) / 1%

(2C) Question Asked: And which of the following vendors is losing market share in your company this year?

Ariba (ARBA) / 7%
FileNet Corp (FILE) / 5%
Webmethods Inc (WEBM) / 5%
Agile Software (AGIL) / 4%
Cognos (COGN) / 4%
Manugistics Group (MANU) / 4%
Microstrategy (MSTR) / 4%
SalesForce.com (CRM) / 4%
Vignette (VIGN) / 4%
Progress Software (PRGS) / 3%
Broadvision (BVSN) / 2%
Business Objects SA (BOBJ) / 2%
Hyperion Solutions (HYSL) / 2%
JDA Software (JDAS) / 2%
TIBCO Software (TIBX) / 2%
Manhattan Assoc. (MANH) / 1%
MatrixOne (MONE) / 1%
RightNow Technologies (RNOW) / 1%
Ascential (ASCL) / 0%
Retek (RETK) / 0%

Net Difference Score–Vendors Gaining Market Share vs. Vendors Losing Share

Vendors Gaining
Market Share / Vendors Losing
Market Share / Net Difference Score
Cognos (COGN) / 17% / 4% / +13
SalesForce.com (CRM) / 15% / 4% / +11
Business Objects SA (BOBJ) / 8% / 2% / +6
TIBCO Software (TIBX) / 8% / 2% / +6
Ascential (ASCL) / 5% / 0% / +5
Hyperion Solutions (HYSL) / 7% / 2% / +5
JDA Software (JDAS) / 7% / 2% / +5
Microstrategy (MSTR) / 9% / 4% / +5
Agile Software (AGIL) / 8% / 4% / +4
Retek (RETK) / 4% / 0% / +4
Manhattan Assoc. (MANH) / 4% / 1% / +3
Broadvision (BVSN) / 4% / 2% / +2
FileNet Corp (FILE) / 6% / 5% / +1
Webmethods Inc (WEBM) / 6% / 5% / +1
MatrixOne (MONE) / 1% / 1% / 0
RightNow Technologies (RNOW) / 1% / 1% / 0
Vignette (VIGN) / 4% / 4% / 0
Manugistics Group (MANU) / 3% / 4% / -1
Progress Software (PRGS) / 2% / 3% / -1
Ariba (ARBA) / 5% / 7% / -2

Cognos and Salesforce.com Gain Ground. We looked at small to mid-sized vendors, and Cognos (Net Difference Score = +13) and Salesforce.com (+11) were the two leaders in terms of gaining market share in respondent companies this year.

Ariba Losing Ground. On the down side, Ariba (-2) was the software vendor that had lost the most market share among Alliance respondent companies. Progress Software
(-1) and Manugistics Group (-1) were also seen as losing market share.

(2D) Question Asked: How satisfied is your company with the following vendors? (Please rate only those that your company has previously purchased products from or had experiences with)

Satisfied / Unsatisfied / Very Satisfied / Somewhat Satisfied / Somewhat Unsatisfied / Very Unsatisfied
Microstrategy (MSTR) / 84% / 16% / 13% / 71% / 16% / 0%
Agile Software (AGIL) / 80% / 20% / 24% / 56% / 16% / 4%
Hyperion Solutions (HYSL) / 78% / 22% / 26% / 52% / 19% / 3%
TIBCO Software (TIBX) / 78% / 23% / 15% / 63% / 19% / 4%
Ascential (ASCL) / 77% / 23% / 15% / 62% / 15% / 8%
Webmethods Inc (WEBM) / 77% / 22% / 19% / 58% / 16% / 6%
Cognos (COGN) / 71% / 29% / 23% / 48% / 25% / 4%
Business Objects (BOBJ) / 70% / 30% / 15% / 55% / 20% / 10%
FileNet Corp (FILE) / 69% / 31% / 21% / 48% / 21% / 10%
Manhattan Assoc. (MANH) / 69% / 31% / 23% / 46% / 31% / 0%
Retek
(RETK) / 69% / 31% / 15% / 54% / 31% / 0%
Ariba
(ARBA) / 65% / 35% / 16% / 49% / 30% / 5%
JDA Software (JDAS) / 65% / 35% / 13% / 52% / 26% / 9%
SalesForce.
com (CRM) / 64% / 34% / 12% / 52% / 28% / 8%
Manugistics Group (MANU) / 62% / 38% / 8% / 54% / 21% / 17%
Broadvision (BVSN) / 60% / 39% / 14% / 46% / 32% / 7%
MatrixOne (MONE) / 59% / 42% / 17% / 42% / 42% / 0%
Vignette
(VIGN) / 50% / 50% / 8% / 42% / 50% / 0%
Progress Sftwre (PRGS) / 47% / 53% / 18% / 29% / 41% / 12%

Company Satisfaction Ratings. When asked to rate their companies overall satisfaction with small to mid-size vendors, respondents gave the highest satisfied ratings to Microstrategy (84%) and Agile Software (80%). At the other end of the spectrum, Vignette (50%) and Progress Software (47%) received the lowest ratings.

(3) Question Asked: From the above list of vendors, which one would you say your company has been most satisfied with, and which one have you been least satisfied with? Please mention why.

A sample of Alliance member responses can be found in Appendix B on page 20.

(4) Question Asked: Looking at the following areas, which one is most driving your software purchasing decisions?

Existing software is getting outdated and must be replaced / 36%
A general improvement in business conditions and capital budgets / 15%
New software capabilities are accelerating the replacement cycle / 14%
Improved customer service / 6%
New software is easier to use / 3%
We currently do not need to purchase any new software / 14%
General slowdown in business conditions and capital budgets / 4%
We are waiting for new technology enhancements before purchasing new software / 3%
Other / 5%

What’s Driving the Purchasing Decision? Better than a third of respondents (36%) say that “replacing outdated existing software” is the top driving force behind their companies’ software purchasing decisions. “An Improvement in business conditions/budgets,” (15%) and “New software Capabilities” (14%) were also cited as driving the replacement cycle.

(5) Question Asked: Many analysts believe the introduction of the Sarbanes-Oxley Act and the HIPAA regulations have caused companies to increase spending on managing and retaining their email communications.

Has your company purchased Email Management Software in the past year?

Yes, we purchased Email Management Software in the past year / 9%
No, but we plan to purchase Email Management Software in the next 12 months / 11%
No, we have not purchased Email Management Software in the past year and have no plans to purchase it in 2005 / 80%

(5A) Question Asked: What is the primary reason your company purchased or plans to purchase Email Management Software? (Please name specific vendor you chose or are considering.)