Business Software Spending Continues to Improve

Includes: CTXS, HPQ, MFE, MSFT
by: ChangeWave Research

By Jean Crumrine and Paul Carton

ChangeWave’s latest survey of corporate software buyers shows the business software spending environment continuing to improve. The January 12-22 survey points to the best overall spending outlook in more than two years.

A total of 1,635 respondents involved with software purchasing in their company participated in the ChangeWave survey.

Software: 90 Day Outlook

A total of 18% of respondents say their company will spend more on software over the next 90 days – a 2-pt improvement from the previous survey in October 2009. Just 15% now say they’ll spend less – 3-pts better than previously.

In a further bullish sign, corporate capital budgets have registered an improvement for the fourth consecutive survey.

A total of 14% of respondents say their company’s capital budget increased over the past 90 days – 4-pts better than previously. And while 21% still say their cap budget has adjusted lower – that’s also 4-pts better than previously and a huge 25-pt improvement since the low of a year ago.

Leading Software Categories Going Forward

A key focus of the ChangeWave survey is on corporate spending increases and decreases within specific software categories. And in a highly promising sign, we’re seeing a projected net increase in spending for the next 90 days across multiple software categories.

The following categories registered the biggest improvements since October:

When we asked software buyers to tell us the key reasoning behind their software spending plans going forward, two trends stood out from the rest.

  • 21% said the driving force in their firm’s software purchasing decisions is their existing software is getting outdated and must be replaced – 1-pt higher than previously.
  • Only 15% cited a general slowdown in business conditions and capital budgets as the factor most driving their purchasing decisions – 2-pts better than in October.

Software Companies With Momentum

At the software vendor level, Microsoft (NASDAQ:MSFT) continues to show the greatest signs of software market strength going forward – with the new Windows 7 operating system clearly driving that momentum.

McAfee (MFE) is also showing an uptick going forward. The recent cyber attacks from China have highlighted increased concerns over corporate vulnerability – and McAfee appears well-positioned to profit from the increased demand.

Other vendors showing signs of momentum going forward include Hewlett-Packard (NYSE:HPQ) and Citrix (NASDAQ:CTXS) – each up 3-pts from previously.

We note that Microsoft and Hewlett-Packard recently announced a partnership for research and development of cloud-computing solutions. Citrix also provides cloud computing services, as well as virtualization software.

Disclosure: No Positions