IT Purchase Trends in Indian Enterprises

The number of CIOs who intend to purchase ERP software has increased by 134% as compared to last year, indicating that ERP will be a high growth area. Similarly, CRM, HRM, structured cabling and wireless access solutions are other areas where more CIOs have shown interest.

Saturday, September 06, 2008

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There are many different ways of measuring growth. One is to look at the actual number of units sold of a particular product. Another is to look at the actual sales figures, and son on. But the key ingredient required to achieve any of these figures is only one: intention to purchase. Unless the buyer is convinced or feels the need to purchase a product, there can be no sale. This is the fundamental principle that we've analyzed to determine the likely growth in various enterprise IT categories in the near future. The good news is that more CIOs intend to purchase IT products and services in the near future as compared to last year. This growth is 25% on an average, which is remarkable.

Let's analyze this more deeply by looking at the first graph that maps intention to purchase vs. current ownership. You'll find a very interesting trend here. The pink line maps the current ownership figures of various brand categories amongst the CIOs we surveyed this year for the Most Wanted IT Brands survey. Here, you'll notice that ownership of office PCs is the highest, while that of ERP software is the lowest. This is obvious, because PC penetration is much higher than ERP. Now look at the blue line, which maps the intention to purchase of various IT decision makers for the different categories. Notice anything interesting? The intention to purchase is much higher in areas where the current ownership is low. For instance, 44% of the CIOs we surveyed already had ERP, meaning there were another 66% who didn't currently own it. That's why, there's considerable intention to purchase ERP software amongst this community.

Likewise, current ownership figure of office PCs is 100%, meaning most CIOs already have PCs in their organizations. Therefore, the intention to purchase more office PCs is not as high, and arises only when the organization expands or upgrades existing machines.

There are however, a few anomalies here as well. Not every product category depends upon current ownership, or the lack of it. In Application Servers for instance, current ownership is 64%, and yet the growth in intention to purchase for the same is only 40%. Though it's good news for app server vendors if 40% more CIOs intend to buy their products, the growth is not as high as ERP software. Similarly, you'll notice that 97% of the CIOs already own laptops, and only 3% don't, and yet 40% more CIOs intend to purchase laptops as compared to last year. Similarly, we've included all brands we had tracked last year as well as this year to get an idea of the growth in intention to purchase. The second graph makes things more clear. ERP is expected to be the highest growth area, followed by CRM, HRM, Structured cabling, and wireless access solutions. The number of CIOs intending to purchase products in these segments has increased by more than 90% as compared to last year.

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