Analysts Expect Software Bounce in '04

Datamation content and product recommendations are editorially independent. We may make money when you click on links to our partners. Learn More .

NEWYORK — Businesses will stick to small purchases and minor upgrades
according to US Bancorp Piper Jaffray software analysts.

Speaking during a panel discussion Tuesday at the investment firm’s technology
conference here, the analysts, as well as a networking security consultant,
said the biggest reason they expect a spending uptick is because so many
IT upgrades were postponed during the economic slump of the past few years.

Software vendors, meanwhile, are coping with the spending slowdown by
rolling out smaller packages and upgrades. That’s why we’re seeing more
software modules by enterprise providers said Tad Piper, a senior research
analyst with the investment bank.

Enterprise networks are making buying decisions that help
them run their business more strategically, he said. Many software
providers, especially in the application server layer, are rolling out
upgrades, “as a way to hold their place for any spending upgrades in 2004,”
he said.

Other areas of opportunity in the short- as well as long term, include
network security and identity management, according to Piper.

Security spending is like taking care of a car, added Fred Rica, who took
part in the panel. He heads the threats and vulnerability assessments
practice for
PricewaterhouseCoopers.

“You can change the oil at 2,000 miles, or rebuild the engine at 100,000
miles.” Because so many companies put off even maintenance work, he
expects more spending in this area, especially next year.

Since passage of new accounting and oversight rules of the
Sarbanes-Oxley Act of 2002, companies that upgrade their accounting systems
to improve data capture will look for bigger upgrade projects in
their network applications, he predicted.

It’s another reason why corporate portals are becoming more
sophisticated. “Many companies are still data-rich but information poor,” he
said. They need dashboard-like applications that help enterprise managers
gather and make sense of the barrage of data and information coming to them
about their increasingly complex networks.

Rica also expects an uptick in identity management.

It’s about helping the right people have the right access at the right
time, he said. “But that’s not really a technology sale, it’s more about
helping customers solve a business problem.”

For now, Piper added, enterprise software companies use upgrades
and smaller packages to make sure they have a chance to sell more modules
next year.

In addition to rolling out new software upgrades in smaller packages, or
modules, analysts said they are offering pilot programs that give
customers a longer product trial period.

Symantec, the security software company, is in a strong position to
benefit from the increased interest by enterprise purchasers, they said,
as it has many different modules in its product portfolio. (The firm does not provide investment banking for the company, analysts said during the panel.)

Piper said Symantec’s position could spur other security software
companies to purchase different companies to help them round out their suite
of security offerings for corporate customers.