NEWYORK -- Businesses will stick to small purchases and minor upgrades according to US Bancorp Piper Jaffray software analysts.
Speaking during a panel discussion Tuesday at the investment firm's technology conference here, the analysts, as well as a networking security consultant, said the biggest reason they expect a spending uptick is because so many IT upgrades were postponed during the economic slump of the past few years.
Software vendors, meanwhile, are coping with the spending slowdown by rolling out smaller packages and upgrades. That's why we're seeing more software modules by enterprise providers said Tad Piper, a senior research analyst with the investment bank.
Enterprise networks are making buying decisions that help them run their business more strategically, he said. Many software providers, especially in the application server layer, are rolling out upgrades, "as a way to hold their place for any spending upgrades in 2004," he said.
Other areas of opportunity in the short- as well as long term, include network security and identity management, according to Piper.
Security spending is like taking care of a car, added Fred Rica, who took part in the panel. He heads the threats and vulnerability assessments practice for PricewaterhouseCoopers.
"You can change the oil at 2,000 miles, or rebuild the engine at 100,000 miles." Because so many companies put off even maintenance work, he expects more spending in this area, especially next year.
Since passage of new accounting and oversight rules of the Sarbanes-Oxley Act of 2002, companies that upgrade their accounting systems to improve data capture will look for bigger upgrade projects in their network applications, he predicted.
It's another reason why corporate portals are becoming more sophisticated. "Many companies are still data-rich but information poor," he said. They need dashboard-like applications that help enterprise managers gather and make sense of the barrage of data and information coming to them about their increasingly complex networks.
Rica also expects an uptick in identity management.
It's about helping the right people have the right access at the right time, he said. "But that's not really a technology sale, it's more about helping customers solve a business problem."
For now, Piper added, enterprise software companies use upgrades and smaller packages to make sure they have a chance to sell more modules next year.
In addition to rolling out new software upgrades in smaller packages, or modules, analysts said they are offering pilot programs that give customers a longer product trial period.
Symantec, the security software company, is in a strong position to benefit from the increased interest by enterprise purchasers, they said, as it has many different modules in its product portfolio. (The firm does not provide investment banking for the company, analysts said during the panel.)
Piper said Symantec's position could spur other security software companies to purchase different companies to help them round out their suite of security offerings for corporate customers.