VoIP And Security Beat Out RFID In Battle For Business Dollars

In the battle for a growing but always limited IT dollar, business executives are more likely to invest in security and voice over IP than radio-frequency identification technologies.

That's one finding in a study issued Monday by Siemens Financial Services that shows senior business executives will spend a lot more on IT this year, especially software and hardware.

Siemens Financial--which helps finance corporate leases and purchases of equipment, including IT products--says 36% of the 118 business executives surveyed said their business had recently invested in security and VoIP equipment.

Only 16% of respondents had purchased RFID products. The disparity among these technologies likely will continue through this year, Siemens Financial CEO Bill Zadrozny says. Businesses need to invest in security to keep their systems safe, he says, and they see VoIP as a less-expensive alternative to traditional PBX phone systems, with their investments providing big dividends. Not so with RFID.

In an interview, Zadrozny said that Siemens finance customers don't seem to be interested in RFID. "We've had no one that we're aware of that's using this," he said. "You just hear about Wal-Mart kind of pushing this off on their suppliers. We haven't seen any widespread acceptance of this at all. I don't think there is a compelling reason for people to use this. They got so many other things to invest in."

And companies are investing in IT. Half the surveyed companies plan to increase IT spending this year by an average of 22%. If they don't invest in IT, nearly all say they'll be at a disadvantage to their competitors.

Other findings from the Siemens survey:

67% of companies rank the strength of the current IT spending recovery at least a 7 on a 10-point scale.

Of companies that increased IT spending during 2004, 77% reported double-digit spending growth.

Of companies expecting continued growth in IT spending in this year, 61% see a double-digit increase.

Hardware, at 30%, and software, at 28%, constitute the largest portion of planned 2005 IT budgets.

Companies expect telecommunications to account for 15% of their IT budgets this year. More that a third of companies have invested in VoIP, making it an emerging area of growth.

Companies expect equipment-replacement cycles to shorten over the next five years. This will be particularly pronounced in software, an area where 63% of companies expect shorter replacement cycles.

Siemens interviewed 118 business executives Jan. 21 and Feb. 7. Nearly half held titles of CFO, controller, or treasurer. Three of 10 respondents held titles of VP, senior VP, or executive VP.