VAR500: Expect Boost In IT Spending

Large technology solution providers are bullish about their financial health. Although profit margins bottomed out in 2001, a consensus is betting on a market turnaround this year, based on improving technology innovations and renewed customer demand.

According to a recent Bernett Research Services survey of 60 executives from the VARBusiness 500,our annual ranking of North America's largest solution providers,business-technology investment is on the rise. A vast majority of respondents (69 percent) indicated their companies' sales were in line with, or ahead of, expectations during the past three months. What's more, three in five reported their Q1 2002 sales were up from Q4 2001. In addition, a majority of respondents believe their company's operating margins and employee utilization rates will improve in the next three months (50 percent and 58 percent, respectively).

As customers seek IT solutions to help gain a competitive position and improve their operational efficiencies, nearly three-quarters of the VARBusiness 500 executives (70 percent) expect their average customer's IT investments to similarly advance next quarter. Following the impact of heightened terrorism, short-term spending is predicted to most likely surpass expectations in security and privacy software (52 percent), voice and data networking (41 percent), and wireless and mobile technologies (28 percent).

The bottom line: End users are searching for expedient and economical ways to get their applications up and running quickly. Many companies have neither the personnel, equipment nor capital to support a full IT team. And, at a time when customers no longer buy consulting services from the same firms that audit their books, a huge majority of respondents (87 percent) expect independent solution providers to win new engagements.

How have your sales been? Send me an e-mail at bmarkowi@cmp.com. For additional survey results, see www.varbusiness.com/sections/apps/2002v500research.asp.