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Network spending flat for '03 -- except for security, management

Spending related to enterprise networks will be flat overall in 2003, according to a new survey by

Spending on networking infrastructure in 2003 is likely to be similar to what it was this year, according to a new survey. Forty-two percent of the 400 site members who responded to the survey said that their budgets for 2003 are either the same or between 1% and 5% more than they were in 2002.

Zeus Kerravala, vice president of enterprise computing with the Boston research firm the Yankee Group, said that those numbers are consistent with what he sees in the marketplace. Yankee Group forecasts that, next year, IT spending will only rise about 3%.

The slow economy is certainly a factor. But equally important, he said, is that there is not a compelling reason to upgrade infrastructure right now. There is no killer app that people must upgrade their networks to accommodate.

Dave Passmore, a research director with the Midvale, Utah, research firm the Burton Group, agreed. While there are some interesting technologies on the horizon, such as 10 gigabit Ethernet, companies do not need it right now, so they are putting off spending if they can.

Tight budgets have also created more pressure for IT managers to justify their expenditures. All IT spending has to meet ever-higher ROI standards, Kerravala said. No one is willing to spend unless they feel that the purchase will pay for itself.

Some weary of the constant focus on ROI

Survey respondent Barend Wiegman, director of information systems for GlobalSpec Inc., a Troy, N.Y., online technology catalog company, said that ROI has become a mantra in his department. "We work through projects and everyone wants to know what the ROI is," he said. "We should get rid of that buzzword. IT is a cost center, not a profit center."

Despite the tight budgets, there are a few areas of spending that are likely to be important next year.

Forty-five percent of those responding to's survey said that security projects would receive the greatest commitment from their companies. And that's why security is one area that is likely to see increased spending next year, Passmore said.

Security is also one of the few areas that has escaped the ROI microscope, he said. It is hard to quantify how much money can be saved by keeping a company's data from being exposed. With security, it's not so much ROI that drives decision making but uncertainty and fear, Passmore said.

Weigman said that in the year since September 11, disaster recovery has become an important priority for his company and an area in which they are planning to invest next year.

Other areas are likely to see a bit of activity. Thirty-six percent of respondents to's survey said they're planning to spend on network management and monitoring. Making do with the resources you have is likely to remain important next year.

VoIP, wireless LANs remain popular

Passmore said that voice over Internet protocol (VoIP) is likely to see continued growth, in part because companies are beginning to see how it can save them money. And wireless local area networks are likely to continue on their healthy growth curve, in part because the systems are so inexpensive to deploy.

Kerravala said that spending is not likely to grow significantly again until companies begin to rethink the role that IT can play in a company's larger business, particularly in increasing productivity. One of the best ways to increase company revenues is to increase productivity. But companies can only gain a few points of productivity increase by making people work longer hours. If businesses want to see double-digit leaps in productivity, they cannot just squeeze that from employees. They have to work differently. And that requires much smarter use of technology, Kerravala said.

Things such as unified messaging, Web services and better integration of existing systems can help increase productivity, and Kerravala said that this fact will likely lead to more and smarter spending without the constant emphasis on ROI.

But don't expect any big leaps until you read the predictions this time next year. Kerravala said that 2004 is likely to be better than the one we are fast approaching.


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