AMR predicts flat IT market next year

Anyone looking for a turnaround in the high-tech industry shouldn't hold his breath, because IT budgets will remain flat in 2003, according to a just-released survey from Boston-based AMR Research Inc.

With that in mind, IT executives more than ever must be able to wed their applications to business processes and demonstrate their value, according to speakers at the AMR Research's Fall Executive Conference here. The theme of the show is the so-called "performance-driven" enterprise.

"Even in this sluggish economy, we are witnessing a structural change in the way companies purchase enterprise applications," AMR President and CEO Tony Friscia said in an announcement Monday.

"While the previous technology boom was driven by spending allocated to IT departments, the next wave of 'must-have' applications will need to deliver demonstrable value to -- and thus be driven by -- business executives. Leading software companies are investing to build those applications now so that they will be ready to deliver when purse strings loosen," said Friscia in the announcement.

As part of its announcement, AMR also released its quarterly survey of 100 IT and business executives, which was conducted in October.

Among the results was the finding that IT budgets will remain flat in 2003. In addition, 39 percent of the respondents said integration is their top priority IT investment for 2003, 37 percent said data warehousing is their No. 1 goal, and 31 percent said they will focus first on physical infrastructure.

According to an October note written about the survey, companies will still have to invest in new technology to gain performance increases. Those increases could result from creating demand visibility, knowing the profitability of customers and orders and getting new products to market faster But to make those initiatives work, according to AMR analyst Bruce Richardson, who spoke Monday, users must establish sound business practices that mesh well with applications, and they must populate their systems with clean data. They will also have to get a solid mandate from CEOs if they are to succeed.

"It's simple, but it's a way of rethinking the world of business," said Richardson.

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