Analysis & Commentary:

AREAS THAT WILL SHAPE BIZ INVESTMENT IN TECH THROUGHOUT ‘02

According to Gartner Inc, the potential of technology to foster business growth in the midst of a shifting environment will remain strong throughout 2002. Gartner revealed several key findings within three crucial areas that will shape business investment in technology for 2002 and beyond. These areas include external forces, business behavior, and applications and technology trends.

"We found that across industries, geographies and businesses, the potential for IT as an engine for efficiency, growth and opportunity will remain undiminished in 2002," said David McCoy, vice president and research director for Gartner. "However, we also found that external forces such as the evolving business climate and unpredictable international events will significantly impact how companies view the role technology plays within their business."

A team of Gartner analysts elevated these predictions to the top, drawing from the broad spectrum of Gartner's research coverage areas. The Gartner research Spotlight "Gartner Predictions for 2002" provides links to analysts' research within the various segments. This Spotlight can be found on Gartner's Web site at www.gartner.com/1_researchanalysis/focus/predictions2002.html.

External Forces

Large-scale economic, social and political shifts will shape the way companies view technology in 2002. Gartner's findings include:

• Security, privacy and safety will remain a top concern, and many businesses and programs will receive significant funding and resources for these efforts, possibly siphoning off investment funds from other areas.
• Between 2002 and 2005, the number of consumers using online account management will more than double, reaching 45 percent of the U.S. adult population.

"Although economic caution has already devastated budgets, not all external forces are negative. The challenge will be to have a balanced response that streamlines, but that does not weaken, IT and business capabilities," McCoy said.

Business Behavior

How companies tune their business strategies to respond to events will determine their appetite for technology. Gartner's findings include:

• Unlike the case with other IT services, outsourcing expenditures will increase in 2002 over 2001 as a way to transfer assets, forgo capital expenditures and reduce costs.
• Through 2004, businesses will continue to view the discipline of CRM as a critical component of corporate strategy even though past CRM implementations have failed to meet expectations.
• Shell shocked from 2001, businesses will approach 2002 conservatively, focusing on short-term return on investment (ROI), acquiring quick-payback products and services, and cutting back substantially on new IT spending.

"One clear warning lies in waiting: when economic recovery begins, rising demand for IT will outstrip the IT budgets set during leaner times," said Diane Tunick Morello, vice president and research director for Gartner. "As businesses prepare for economic recovery, most likely in the second half of 2002, they will again look toward IT as a growth engine into the next business cycle. Unless business and IT executives strike a balance between growth-targeted IT investment requirements and constrained IT budgets, many IT-powered business initiatives will falter or fail when the economy turns positive."

Applications and Technology Trends

Some technologies and applications have strong potential in good times and in bad, and some efforts are too important to be derailed. Gartner's findings include technologies that have great potential, even if volatility in 2002 is assured for some:

• More than 50 percent of mobile applications deployed at the start of 2002 will be obsolete by the end of 2002.
• Web services will capture substantial attention in 2002, and by 2004, Web services will dominate deployment of new application solutions for Fortune 2000 companies.
• During 2002, IT infrastructure will be pulled in two directions, with the need to follow through on cost reduction initiatives that began in 2001, coupled with the need to anticipate and fulfill critical IT initiatives.
• During 2002, leading-edge businesses will intensively pursue integration of applications both inside and outside the enterprise.

"To minimize new investments in IT infrastructure, many organizations will identify and redeploy underutilized server and storage resources, actions that will drive targeted demand for capacity analysis tools and asset management software," said Mark Nicolett, vice president and research director for Gartner.

Additional information is in the Gartner research spotlight "Gartner's Predictions for 2002." This Gartner special report reaches across all the predictions Gartner has produced for action in 2002 and distills the top-level advice, leading trends and cross-research synthesis that planners for 2002 need.

For more information visit www.gartner.com.