According to the latest Wendover Global Insight IT Spending Index, businesses are battening down the hatches on IT spending moving into 2005. Wendover research show that technology investments through Q1 2005 will be down 11 percent, meaning VARs and solution providers are in for some hard sells in the next few months. The construction, real estate and communications sectors, in particular, have reported fewer plans for IT spending, though demand for products and services across most verticals show lower spending through June 2005.

The Wendover Index is based on a sample population from 80,000 top businesses throughout the United States and the United Kingdom. The businesses surveyed cover all sizes, with the majority being in the SMB market with between 100 and 1,000 employees. The Index shows the hardware and software markets are expected to see a slowdown through Q1 2005, with demand in hardware hit hardest as reports for planned investments are projected to decline 70 percent. Overall spending in software will lag as demand for application-specific software including operations, manufacturing, maintenance and purchasing functions diminishes.

Likewise, reported plans for spending on consulting services is expected to decline by 50 percent, and the number of e-commerce solution implementations will see a 47 percent decline. Meanwhile, overall spending on IT outsourcing will decline by 23 percent, with spending on consulting services, training and staff augmentation lowering.

Insurance, retail trade and manufacturing industries appear to buck the overall trend by reporting greater plans for IT spending well into 2005. The insurance industry is shows mounting interest in buying and implementing technology as companies work to address added claim volume, data security and modernizing legacy systems. As a result, the number of projects the industry takes on through Q1 2005 will balloon by 27 percent.

The retail trade sector can be looked to for adding 22 percent more projects through Q1 2005 as retailers beef up technology to meet increased volume in the coming holiday season. Compared with all other industries indexed, retailers reported the greatest increase in the number of plans for future technology spending. Investment by the finance sector is also poised for growth as firms are challenged to meet stringent new requirements for risk management and corporate governance while improving on the client-customer relationship.

The shifted focus on productivity-enhancing solutions and process innovation is expected to drive CRM investment into 2005 with 25 percent more businesses reporting intentions to implement CRM solutions. Second only to data management, CRM solutions will continue to be the most invested technology among businesses.