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Emerging software tools help boost IT spending projections

Forrester Research forecast sees hardware spending lagging; IT hiring outlook mixed

April 6, 2012 04:19 PM ET

Computerworld - Overall U.S. tech spending is forecast to grow by 7.1% this year and then by 7.4% in 2013, according to Forrester Research.

The strongest growth area will be software management tools, and much of that growth will come from cloud-based products.

Overall financial management, human resources management, ePurchasing, CRM and business intelligence software will collectively grow by 11.4% through 2011, and 12% next year, Forrester said.

Some hot new software categories are emerging from these broad software management areas.

These include case management tools, automated spend analysis, services procurement, supplier risk and performance management, services procurement, as well as talent and recruitment management software tools, according to Forrester.

Software in these categories will grow by 15% to 20% both this year and next, with most purchases for software as a service products, the researcher projected.

"The problems that technology is being expected to solve are expanding," said Andrew Bartels, an analyst at Forrester. The emerging tools are used to manage areas that, in the past, lacked strong technical solutions.

Case management software is used to manage a social service case or an insurance case. The tools are designed to bring together all relevant information a user needs to manage a case. They also analytical capabilities and the ability to work with other people.

"The technology that's available has a better fit against the unsolved business problems," said Bartels.

Supplier risk management tools allow a purchasing department, or line of business, to have in one place all the information, such as orders and history of business, about any of its suppliers.

The risk management systems draw on third parties to check the financial condition of a supplier, and can even provide data on non-financial risk factors, such as environmental or social responsibility ratings, said Bartels.

Computer equipment spending growth this year will be 4.5%, less than half of what it was last year, said Forrester. Strong hardware spending over the last two years has given most firms the capacity they need.

Hardware spending will rebound in 2013, rising to 8.4%, Forrester predicts.

Overall IT spending next year will be $1,266 billion on all goods, services and staff.

The largest categories are IT salaries accounting for $241 billion, and software at $232 billion. Computer equipment spending will be $92 billion.

What isn't growing fast is IT hiring.

Forrester estimates that IT staffs grew by only 0.3% last year, although salary and benefit increases brought up spending on staff to more than 4%.

Hiring should grow by 2% this year and then to 4% in 2013. Competition for workers will cause compensation to rise, which will increase staff spending to 7.2% next year.

The IT job market growth is either strong or weak, depending on what government data is used. Differences in IT job estimates are based on the decisions analysts make on what labor categories to include or not include in the estimate.

TechServe Alliance, which tracks government data monthly says that 15,000 IT jobs were added in March out of the 120,000 new jobs reported by the government. TechServe estimates the IT workforce now stands at 4.14 million.

Janco Associates, a research firm that tracks IT employment, looks a narrower segment of IT jobs, and reported a net increase of 4,900 seasonally adjusted jobs IT jobs in March.

Patrick Thibodeau covers SaaS and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at Twitter@DCgov, or subscribe to Patrick's RSS feed Thibodeau RSS. His e-mail address is pthibodeau@computerworld.com.

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