Enterprise Spending On Virtualization To Rise

Recession? Virtualization remains a hot seller, according to the latest quarterly survey by ChangeWave Research. In fact, the faltering economy may have a lot to do with virtualization’s continued strong sales .

Virtualization is designed to help companies reduce the number of physical servers they need, which means less spending on maintenance of servers, power and cooling. Fewer servers also reduce space requirements. It makes sense that companies would continue spending on technology that saves them money, Paul Carton, director of research at ChangeWave, told InternetNews.com.

Of the 1,956 respondents to the survey, 18 percent said they will increase purchases of virtualization software over the next 90 days, up five points from the 13 percent recorded in January.

The planned investments in virtualization come at a time when overall software spending has tanked: 25 percent of the respondents planned to spend less on software over the second quarter of 2008, and only 12 percent planned to spend more, ChangeWave found.

That’s a drop of three points and four points, respectively, from January.

These surveys are conducted among the ChangeWave Alliance’s members, who total 15,000 senior technology and business executives in leading companies in select industries.

Carton said that with a survey base of about 2,000 software buyers, changes of one or two percent are “significant.”

Thirteen percent of respondents said a general slowdown in business conditions and capital budgets was driving their companies’ purchasing decisions – four points more than in January and double the percentage of six months ago.

“We’ve had two straight quarters of really tough results on spending,” Carton added.

Twenty-six percent of respondents said their second quarter capital budget has been adjusted downwards over the past 90 days, up from 22 percent; eight percent said their second quarter capital budget has been adjusted upwards, down from 11 percent; and 55 percent said their second quarter capital budget has remained the same, down from 56 percent.

Describing January as “awful” for software purchases, Carton said the Alliance has “never had negative numbers for capital spending like this in January” and that this is the first time capital spending is decreasing, which is “not a good sign for business spending”.

Worst-hit software

The worst hit software categories are Enterprise Resource Planning (ERP), plans to purchase which dropped by 11 percent from the January survey results; document and enterprise content management , plans to purchase which fell by nine percent; and customer relationship management (CRM) , plans to purchase which slid six percent.

The worst-hit companies in those categories include SAP,with a 12 percent loss in intent to purchase over the next 90 days, followed by Sage Software, with a four percent drop.

Also 40 percent of the respondents said their company has no plans to buy software in the next 90 days, two percent more than in January