IT Trend Index Conducted by ZEW and LEXTA – Increasing Prices in Database Systems and SAP Lowers Potential for Saving Costs in IT

It is to be expected that within the next months, costs in the Information Technologies (IT) will decrease. These are the findings of a survey among 200 IT experts conducted by the Centre for European Economic Research (ZEW) in Mannheim, Germany. The IT Trend Index, calculated on the basis of the survey (information on the calculation at the end of the press release), is clearly in the negative at the moment with a value of minus 24.5 points, indicating that the surveyed experts expect a decrease in prices. According to the 200 IT experts, in percentage terms the decrease in IT costs will be of little more than three per cent until March 2009 (see graphics at the end of the press release). "While the majority of experts expect slight decreases of prices in office communication and computing centres, it is to be expected that prices in database systems and SAP applications will increase until March 2009", says Jenny Meyer, researcher at ZEW.

The trend expected by the IT experts is a continuation to the developments in IT costs so far. So, the IT Benchmark Index of LEXTA Consultants Group, which displays the developments of IT costs between 2006 and 2008, shows that the costs for office communication and computing centres have decreased since 2006 while costs for SAP applications have been on the rise sind 2007.

Concerning the several IT areas, the majority of the experts surveyed by the ZEW for the IT Trend Index expect that the business prices for office communication will drop until spring 2009: the sub-index for prices in office communication composed by workstation systems, as well as E-mails and Internet, is at minus 17.9 points. According to the expectations of the surveyed IT experts this price decrease will be of approx. two per cent.

The sub-index has a significantly lower value for the development of prices in computing centres (memory and server). The value is of minus 57.6 points. According to the experts’ assessment, the prices for components of computing centres will decrease by 8.5 per cent until March 2009.

The trend of decreasing prices is slowed down by the price developments in database systems and SAP applications. The sub-index which reflects these price developments until March 2009 has a value of 15.9 points. According to the experts’ assessment the prices in the IT segment will increase until March 2009 by nearly two per cent.

ZEW/LEXTA Experts Survey

The ZEW conducts a survey among approx. 200 IT experts/EDP managers from companies of the manufacturing industry and selected service sectors with over 100 employees in Germany. The survey concentrates on the price developments and current trends in the IT sector.

The IT Trend Index

The IT Trend Index is composed of the sub-indices office communication, database systems, SAP applications, and computing centres. The total index - as well as the sub-indices - is evaluated within a representative company concerning the relevance of the individual components. The relevance of the representative basket of goods is calculated on the basis of data from the LEXTA Consultants Group. The index can adopt values of -100 to 100, while positive values indicate an increase in prices, and negative values indicate a decrease in prices. The surveyed experts gave their assessment concerning the development of prices of the individual components in the next twelve months on a five-grade Likert scale from “strongly decreasing to “strongly increasing”. Therefore, the IT Trend Index reflects the balance of experts expecting increasing prices minus the part of experts expecting decreasing prices. Furthermore, the expected proportional price development of each component has been examined. The expected proportional price development has been calculated analogously.

Contact

Dr. Jenny Meyer, E-mail: meyer@zew.de