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Tech Industry

Small jump seen for software spending

Research firm Gartner predicts software spending will stage a modest recovery this year, after several years of decline.

Worldwide software spending should stage a modest recovery this year, after several years of decline, according to a study released Monday by research firm Gartner Dataquest.

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Global software spending is expected to hit $76.1 billion in 2003, a 3.5 percent increase over the $73.5 billion spent in 2002, according to the report. The 2002 total dropped 0.7 percent from the previous year.

"All indications show we should be able to go from the sliding negative we've seen the past year and a half to some stabilized growth," said Joanne Correia, vice president of Gartner's software industry research group.

The forecast comes with several major caveats, including the absence of prolonged geopolitical turmoil that could depress markets and eventually restrain information technology budgets.

"If war lasts two months or less and people get out of that deer-in-the-headlights mode, we'll still have a little bit of recovery," Correia said.

Unlike the tech boom years, when money was lavished on the latest software buzz, any boosts in software spending this year are likely to be directed at improving existing technology, Correia said. Companies will focus on projects that better integrate existing systems and promise a quick return on investment.

"Before (companies) extend themselves out to the Web again, they want to get their house in order," she said. "They want to get the systems in-house to work together...and get more out of what they already have."

That will favor large, multipronged companies such as IBM and BEA Systems, Correia said, over "pure play" software makers selling a single type of application.

Looking beyond 2003, Gartner sees equally modest growth next year and going into 2005.

"There's no big technology advancement out there that's going to get everybody to move to a new platform," Correia said. "We don't see any huge new move in the market until the end of 2005 or 2006, when wireless starts pushing everyone to move to a new platform."