Telecommunications equipment buying by enterprises may be starting to bounce back on the strength of voice over Internet Protocol (VOIP), according to an October survey by CIO magazine.
The latest edition of the monthly survey found 37.2 per cent of top IT executives planned to increase their spending on telecommunications gear over the next 12 months, the highest percentage to give that answer since August 2001. In the October survey, 17.4 per cent said they expected to cut spending on telecommunications gear over the next 12 months and 43.8 per cent expect to keep it the same.
Recent conversations with CIOs have indicated that a big factor in the increased spending will be voice over IP (VOIP), which requires some investment in new equipment but is seen as a money-saver over time, Gary Beach, group publisher of CIO magazine, Gary Beach, said. VOIP gear converts voice calls into IP data packets and sends them over the Internet or a private IP network, so a company can bypass carrier charges for traditional long-distance voice circuits. Maximising efficiency and productivity are the biggest issues for most CIOs, and they see VOIP as a good tool for achieving those goals, Beach said.
Spending increases won't stop with telecommunications, according to the survey. On average, the 243 executives who responded to the poll - 95 per cent of whom are from North America - said they expected IT spending at their companies to grow 6 per cent over the next 12 months. That was up from 5.9 per cent the month before and was the most positive response to an October survey since 2000, Beach said. Combined with other results, the response boded well for upcoming IT spending, he said.
"What we're suggesting is that ... technology spending is in an early stage of recovery," he said. "Our take is that the turn happened in June of this year."
Web services may be central to the increased spending, Beach said.
Companies that had planned in 1999 to expand their private intranets out onto the Internet, with partners and customers tied in and carrying out transactions electronically, might finally come back and make that a reality after the bad economic years, he said.
Today the technology was more mature, the standards more robust and the users more sophisticated, he said. Another hopeful sign for spending is a backlog of IT projects that are yet to be completed.
In August, the last time a question on backlogs was included in the survey, 47.1 per cent of respondents said there was a "significant" backlog of projects at their companies.
More than three-quarters of those respondents said budget constraints were more important, but clearing out those backlogs eventually would require resources, indicating more spending was to come, he said.
"As profits improve, the work that has to be done is there," Beach said.
Another survey result may indicate that Web-based commerce is entering the corporate mainstream.
Asked what percentage of their companies' purchases would be made online over the next 12 months, the respondents came back with an average of 23.8 per cent.
That figure, nearly 1 in 4 dollars out of the aggregate value of goods and services to be purchased, was the highest reported since the surveys began in August 2000, Beach said.
The poll was conducted between October 9 and October 16. CIO sent email invitations to a panel of 2000 CIOs and 3000 randomly selected readers of the magazine who matched job function criteria for a CIO.
A variety of industries are represented. Companies with more than 5000 employees represented 17 per cent of the results, according to CIO.
The magazine conducts the survey in association with Deutsche Bank Securities and Ed Yardeni, chief investment strategist at Prudential Securities.