SAN FRANCISCO (CNN/Money) -
Corporate speechwriters at technology firms have been thesaurus fiends these last few months -- struggling to find ways to size up their markets. Words like "murky," "cloudy," "unclear," "uncertain," and "illiquid" pop up regularly. But of course, one company's problem -- the inability to predict next quarter's business IT spending -- is another company's opportunity.
Take, for example, Global Insight, a Waltham, Mass., marketing data firm, and Wendover, a Haverford, Pa., technology survey company. The two are combining resources in hopes of closing the shockingly huge gap between what research firms predict and what actually transpires. They will create the new Global Insight/Wendover Technology Spending Index -- the first survey of its type.
The monthly index, which premieres later this month, bases IT spending predictions on the answers provided by nearly 15,000 respondents at 85,000 firms. Not only is that a far larger pool of respondents than you'll find in a typical survey by Forrester (FORR: Research, Estimates) or Jupiter, but the index bases its results on requests for proposals (RFPs), not on theoretical models that use seasonal buying patterns and external economic influences. In other words, the index holds the potential for making a far more educated guess at spending because it is tying its numbers to companies' actual budgeted IT initiatives. According to a Wendover representative, 76 percent of respondents who say they plan to make a purchase actually follow through.
"Every implementation of any new technology has to start with someone saying 'Yes, I'd like someone to come out to talk to me,'" explains Larry Dillon, Wendover's CEO. "It all starts with a sales call."
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Wendover contacts only companies with more than 1,000 employees and tracks only discretionary IT spending, which includes everything from accounting software to Web services. The index will draw on the vast pool of respondents to show how many companies have honest-to-goodness, budgeted IT spending plans, the theory being that a company won't issue an RFP unless it's been given the green light to make a purchase six to nine months down the road.
Companies can use the survey to see how their sales pipelines compare with the industry's. If a given company is seeing a 10 percent decline in RFPs, but the industry is declining at 20 percent, it's actually doing well.
"A company only knows what's in its pipeline," Dillon says. "It can't call its competitors and ask how their sales prospects are coming. This index gives them actual sales data for their entire industry."
Still, no one's ever done anything like this before, so we don't know yet if it's an improvement on existing indexes. With a statistical pool of nearly 15,000, "it's hard to qualify the respondents," cautions Rob Enderle, an analyst with Giga Information Group. "It's hard to tell if the people answering the survey are actually who they say they are, with the buying power they claim to have."
Still, in a down market, the ability to peer into the sales pipelines of dozens of industries will be a valuable addition to the array of prognostications currently available. The general results of the Technology Spending Index will be released to the public, and companies can pay to get access to the results that are germane to their industries.
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