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The Roundup: What's Driving Spending in 2002?

By David Aponovich

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What's Driving IT Spending in 2002?
Following the IT spending contraction of 1.1% in 2001, Boston-based Yankee Group estimates that U.S. corporate IT spending will increase 3.3% this year before jumping a hefty 11.5% in 2003.

The bright outlook comes at a time when organizations are focusing on two main reasons for investing in technology: to maintain existing system status quo and to gain competitive advantage. According to Yankee Group, the former grows "at a relatively consistent pace" and accounts for the majority of budgets, while the latter represents volatile IT spending - and just a small fraction of overall spending at that.

"Technology dependence coupled with rapid industry evolution makes running existing systems both expensive and unavoidable, which drives status-quo spending. Users also spend on new, untested technology with the expectation that these cutting-edge solutions will deliver unique competitive capabilities," Yankee Group reports.

It also reports that companies' "risk-aversion" to IT spending brought on by the recession will fade in late-2002 and throughout 2003.

Banks Put New Focus on Privacy
An IT research firm says financial services institutions are not rushing right now to solve the consumer-privacy issue.

Meridien Research of Newton, Mass., states that while financial services firms are "spending significantly" on security, database enhancements and opt-out notice mailings, few are investing enough in software to manage customers' privacy.

Meridien says there will be a spending push for privacy management software - technology that manages financial firms' privacy policies and their enforcement on an individual level, based on customer demands and shifting regulations. Spending will grow from $25 million this year on core privacy technology (hardware, software, and services) and to $167 million by 2006. (Figures do not include internal costs - the production and mailing of opt-out notices, staffing customer service departments to handle "right to access" inquiries, regulatory reporting systems, and more.)

The report's author, analyst Dennis Behrman, says a lack of understanding about privacy management issues will create "a large amount of irrational or misdirected spending."

XML: The "De Facto" Standard for B2B Integration
IDC reports that the XML server market grew 440% from 1999 to 2000, a sign that XML is becoming the de facto standard for business-to-business integration.

IDC's report, "XML Server Forecast and Analysis, 2001-2005" predicts that the growth rate of this rapidly emerging market to outperform that of the software industry through 2005. "XML servers are moving rapidly beyond the early adopter phase to play an integral role in the ebusiness platform," says Susan Funke, research manager for IDC's Information and Data Management service. IDC exepcts XML-enabled database management system (DBMS) vendors to maintain rapid growth, with relational database management systems (RDBMS) emerging as the dominant market area for XML servers by 2005.

IDC predicts that XML servers will become more important due to their ability to facilitate application integration for ebusiness platform adoption, among other factors.

Interoperability Coming to IM
Nearly everyone who uses instant messaging (IM) services will soon be able to contact one another, even if they are on two different networks, according to a new report from Ferris Research. It reports industry groups are moving to agree on standards that will permit all those in the fast-growing IM universe to contact any others.

In the consumer market, the report says the current major IM networks serving the consumer market -- AOL, Microsoft's MSN, ICQ and Yahoo -- will doiminate with over 95% of the market.

In the corporate arena, Bantu, Lotus, Microsoft and 2Way will experience "substantial growth in the coming years," as it becomes easier-and more secure-for the employees of organizations to contact each other and individual customers via IM.

While IM will become more pervasive, the technology is not expected to replace e-mail or the telephone. Rather, it will be used as a supplement to those forms of communications.

- This item by Bob Woods of internet.com's InstantMessagingPlanet.