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Heavy Reading Research

Enterprise Spending to Rise in ’05

Enterprises are poised to crack open their wallets and shell out the dough on telecom equipment in 2005, according to Heavy Reading’s “Survey of Enterprise Telecom Purchasing Plans for 2005” released yesterday.

The survey of 109 enterprise employees directly involved in specifying, purchasing, or administering telecom services for their organization found that more than 70 percent will have increased telecom budgets in 2005. And almost 38 percent of those said that spending would jump 10 percent or more -- pretty good signs of a recovery in the making.

Multinational organizations’ budgets are expected to grow the most with 46.3 percent of respondents whose organization operates in more than one country saying their telecom budgets will grow by 10 percent or more next year. By comparison, only 28.8 percent of respondents working for companies that do business within a single country pegged budget increases at 10 percent or more.

The survey found that organizations will be investing in new technologies and services rather than simply maintaining the status quo by maintaining legacy infrastructure. Nearly 60 percent of respondents said that at least 10 percent of their company’s 2005 telecom budget would be earmarked for new equipment or advanced services, with 29.9 percent estimating the budget allocation at 20 percent or more.

Larger organizations weren’t planning to spend on new equipment and services as much, although nearly half of the respondents from this group said their company would use 10 percent to 20 percent of its budget on new equipment and advanced services.

Network security and wireless LAN products top most enterprise shopping lists for 2005, with more than two-thirds of all respondents saying their organization would be acquiring VPN and firewall equipment next year. More than 60 percent identified antivirus products as a likely 2005 budget item and just under 65 percent said their company's purchase plans included 802.11 wireless LAN equipment.

Larger organizations (1,000 or more employees) are especially security conscious with more than 75 percent of respondents from this group saying they would purchase VPN and firewall equipment in 2005, and 61.9 percent shelling out for antivirus products. Intrusion detection and prevention also fit in the budget plans of 52.4 percent of respondents.

Large companies are also looking to take advantage of the cost savings VOIP offers, shown by the 64.3 percent of respondents from that group saying they expected VOIP gear to get a line item in their 2005 telecom budget. Only 48.4 percent of respondents from organizations with fewer than 1,000 employees expect to spend on VOIP equipment.

A majority of respondents also said they expect Ethernet switches to be part of the 2005 budget, with Gigabit Ethernet switches slightly favored over conventional Ethernet and Fast Ethernet products. But video products continue to be the odd man out, with just over 25 percent of respondents from larger organizations saying their 2005 budgets would include video products.

Heavy Reading's 19-page report, “Survey of Enterprise Telecom Purchasing Plans for 2005,” costs $2,495. For more information, please click here.

— Chris Somerville, Senior Editor, Next-Generation Services

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