Internal Investment Priorities to Drive Services Spending in 2004, A New IDC Study Reveals

FRAMINGHAM, MA – MAY 26, 2004 – A new IDC survey of 100 senior executives reveals that the decision to invest in external IT services and business services in 2004 will be predominantly based on internal factors, including strategic priorities, business objectives, and business problems. In addition, the U.S. economy, with its strong impact on corporate profits, is also an important driver with the potential to inhibit services spending should the economy stall in 2004. Finally, the survey reveals that 63% of the participants' existing contracts will end in 2004, suggesting a market ripe for contract renewals and possible vendor shifts.

"These drivers and the differing ways companies will react to them create strong and shifting undercurrents that vendors must navigate to compete successfully in 2004," said Maryanne Coughlin, director of Model and Forecast Management for IDC's Services Industry Research Group. "Vendors with a core competency of uncovering and analyzing business problems should emphasize this capability, while all others should develop their skills in this area."

The following key survey findings are also presented in this report:

— The highest priority business problems in 2004 include internal organization structure, relationships with external constituents, and duplicative or inefficient processes

— The top business objective for 2004 is to increase revenue by focusing on core competence

— The fact most likely to accelerate the timing of spending on external services in 2004 is new business pressure

This IDC study, Services Spending Intentions: Factors Influencing Executive Decisions in 2004 (IDC #31252), examines the 2004 IT services and business services spending intentions of 100 C-level executives at large, US-headquartered companies. It explores the executives' self-reported drivers and inhibitors of planned spending investment decisions and will assist providers of these services as they hone their marketing messages, focus on strategic direction, and invest in the right skills and resources for 2004.

To purchase this document, call IDC's sales hotline at 508-988-7988 or email sales@idc.com.

For more information on IDC's Services Industry research, please contact Melissa Bambauer at mbambauer@idc.com.

About IDC

IDC is the premier global market intelligence and advisory firm in the information technology and telecommunications industries. We analyze and predict technology trends so that our clients can make strategic, fact-based decisions on IT purchases and business strategy. Over 700 IDC analysts in 50 countries provide local expertise and insights on technology markets. Business executives and IT managers have relied for 40 years on our advice to make decisions that contribute to the success of their organizations.

IDC is a division of IDG, the world's leading technology media, research, and events company. Additional information can be found at www.idc.com.

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