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ChangeWave Research Report: Tough Times For Corporate Software Spending | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Few Signs of a Bottom But Virtualization Shows an Uptick May 12, 2008 Overview: ChangeWave’s latest software purchasing survey shows a continued deterioration in business spending on software. A total of 1,956 respondents involved with software purchasing in their company participated in the April 8-15 survey. Tough Times. One-in-four respondents (25%) now say their company will spend less for software over the next 90 days – 3-pts worse than our January 2008 survey.
Only 12% say their company will spend more – down 4-pts from previously. What’s Driving the Slowdown? Thirteen percent (13%) of respondents cite ‘a general slowdown in business conditions and capital budgets’ as driving their company's purchasing decisions – 4-pts more than in January and double the percentage of six months ago. In addition to the above, we asked respondents if there had been any recent changes in their company’s overall capital budgets. Thinking about your company's overall capital budget for 2nd Quarter 2008, have there been any adjustments made over the past 90 days?
Capital Budgets Adjusting Lower. In a clear signal that the spending downturn isn’t over, better than one-in-four respondents (26%) say their 2nd Quarter capital budgets have been adjusted lower over the past 90 days – 4 pts worse than three months ago and more than triple the percentage who say their cap budgets have increased (8%). Software Categories. We also asked about specific software categories, and it’s notable that two-in-five respondents (40%) say their company has No Plans to Purchase Software in the Next 90 Days, a 2-pt uptick from previously. The software categories showing the most weakness going forward are Enterprise Resource Planning (Net Score = -11), Document and Enterprise Content Management (ECM; -9) and Customer Relationship Management (CRM; -6) software.
On a brighter note, the survey results do show Virtualization Software (Net Score = +5) and Security Software (+4) experiencing increased spending going forward. Winning and Losing Companies. VMware (VMW) (up 13-pts) and Citrix (CTXS) (up 5-pts) show momentum in terms of market share gains over the previous 90 days. We’ll take an in-depth look at corporate virtualization spending trends in an upcoming ChangeWave report. On the downside, SAP (SAP) (down 12-pts) shows the greatest market share decline in respondent companies since our previous survey. Sage Software (down 4-pts) also shows signs of weakness. Moreover, visibility for both companies appears weak. Bottom Line: A further retrenchment is occurring in corporate software spending, according to the current survey results. There is little evidence of growth so far in the 2nd quarter. Indeed, the findings point to a continuing recession in business spending. Software categories that are being particularly hard hit include Enterprise Resource Planning, Document and Enterprise Content Management, and Customer Relationship Management software. One clear bright spot in the current malaise is the uptick in corporate spending for both Virtualization and Security Software. That’s good news for VMware and Citrix, in particular. Summary of Key Findings
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Table of Contents
ChangeWave Research Methodology
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Overview: ChangeWave’s latest software purchasing survey shows a continued deterioration in business spending on software. A total of 1,956 respondents involved with software purchasing in their company participated in the April 8-15 survey. (A) Corporate Software Purchasing Trends (1) How would you characterize your company's spending plans for software over the next 90 days compared to the previous 90 days?
Tough Times. One-in-four respondents (25%) now say their company will spend less for software over the next 90 days – 3-pts worse than our January 2008 survey. Just 12% say their company will spend more – down 4-pts from previously. 2) Looking at the following areas, which one is most driving your software purchasing decisions?
What’s Driving the Slowdown? Thirteen percent (13%) of respondents cited ‘a general slowdown in business conditions and capital budgets’ as driving their company’s purchasing decisions – 4-pts more than in January and double the percentage of six months ago. (3) Question Asked: Thinking about your company's overall capital budget for 2nd Quarter 2008, have there been any adjustments made over the past 90 days?* 
*Previous January 2008 Survey asked about 1st quarter 2008 Capital Budgets Adjusting Lower. In another clear sign that the corporate spending downturn isn’t over, better than one-in-four respondents (26%) say their 2nd Quarter capital budgets have been adjusted lower over the past 90 days – 4 pts worse than three months ago, and more than triple the percentage who say their cap budgets have increased (8%). (4) Which of the following types of software will your company be purchasing over the next 90 days? (Check All That Apply)
Software Categories. We also asked about specific software categories, and it’s notable that two-in-five respondents (40%) say their company has No Plans to Purchase Software in the Next 90 Days, a 2-pt uptick from previously. (4A) And over the next 90 days, do you think your company's software spending in each of the following areas will increase, decrease, or remain the same compared to the previous 90 days?
The software categories showing the most weakness going forward are Enterprise Resource Planning (Net Score = -11), Document and Enterprise Content Management (ECM; -9) and Customer Relationship Management (CRM; -6) software. 
On a brighter note, the survey results do show Virtualization Software (Net Score = +5) and Security Software (+4) experiencing increased spending going forward.
(B) Top Winning and Losing Companies – ChangeWave Corporate Software Spending Survey
* Sage Software is part of The Sage Group, which is listed on the UK stock exchange. Winning and Losing Companies. VMware (VMW) (up 13-pts) and Citrix (CTXS) (up 5-pts) show momentum in terms of market share gains over the previous 90 days. We’ll take an in-depth look at corporate virtualization spending trends in an upcoming ChangeWave report. On the downside, SAP (SAP) (down 12 pts) shows the greatest market share decline in respondent companies since our previous survey. Sage Software (down 4-pts) also shows signs of weakness. Moreover, visibility for both companies appears weak.
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This report presents the findings of our latest ChangeWave Alliance survey on corporate spending for software. The survey was conducted April 8-15 and a total of 1,956 Alliance members involved with IT spending in their company participated. The Alliance's proprietary research and business intelligence gathering system is based upon the systematic gathering of valuable business and investment information directly over the Internet from accredited members. ChangeWave surveys its Alliance members on a range of business and investment research and intelligence topics, collects feedback from them electronically, interprets and reconciles the information in a cohesive manner and converts the information into valuable quantitative and qualitative reports. The Alliance has assembled its membership team from senior technology and business executives in leading companies of select industries. Nearly 3 out of every 5 members (56%) have advanced degrees (e.g., Master's or Ph.D.) and 93% have at least a four-year bachelor's degree. The business and investment intelligence provided by the Alliance provides a real-time view of companies, technologies and business trends in key market sectors, along with an in-depth perspective of the macro economy – well in advance of other available sources.
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ChangeWave Research, a subsidiary of InvestorPlace Media, LLC, identifies and quantifies "change" in industries and companies through surveying a network of thousands of business executives and professionals working in more than 20 industries. ChangeWave has a very unique asset in its 15,000-member Alliance. We have assembled our membership team from a broad cross section of more than 20 vertical markets such as telecom, semiconductors, data storage, and biotechnology, along with a wide range of professional disciplines including CIOs, IT managers and programmers, executive management, scientists, engineers and sales personnel. The ChangeWave Alliance is composed of senior technology and business executives in leading companies - credentialed professionals who spend their everyday lives working on the frontline of technological change. This proprietary research and business intelligence gathering system provides a real-time view of companies, technologies and business trends in key market sectors along with an in-depth perspective of the macro economy - well in advance of other available sources. ChangeWave surveys its 15,000 Alliance members on a wide range of investment research topics and converts the findings into valuable investment and business intelligence reports. ChangeWave delivers its products and services on the Web at www.ChangeWave.com. ChangeWave Research does not make any warranties, express or implied, as to results to be obtained from using the information in this report. Investors should obtain individual financial advice based on their own particular circumstances before making any investment decisions based upon information in this report. For More Information:
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