Market Data.

IT sector declares highest number of profit warnings since 1998

The Software & Computer Services (SCS) sector saw a threefold increase in profit warnings during 2000 according to business advisers Ernst & Young in its latest quarterly `Analysis of Profit Warnings' (and annual warnings review). Warnings overall rose again on the previous quarter, as they had steadily throughout the year, by 4 per cent in the fourth quarter of 2000.

The SCS sector accounted for 22 per cent (17) of the 77 profit warnings issued in Quarter 4, 2000, one of the highest number recorded for any sector in any quarter since Ernst & Young began its quarterly analyses in 1998. The `IT Hardware and Telecommunication Services' sector warnings for the same period bump this figure up to almost a third of the total profit warnings issued. The impact of sales below forecast lay behind 53 per cent of profit warnings across several sectors. 14 per cent cited low or declining sales in their US markets, some of which arose from delays in obtaining major contracts where customers may have been reluctant to commit to large-scale purchases in the face of a global economic slowdown. Five out of the ten largest warning companies in TMT (technology, media and telecommunications)-including IDS, Telspec and Vega-indicate that IT spending may be one of the first casualties. With the collapse of confidence in the Internet market, small-to-medium size enterprises (SMES) appear to be concerned about the value of plans to go on-line. Over 50 per cent of the listed TMT companies issuing warnings were emerging enterprises with revenues in the 1 m [pounds sterling] - 10m [pounds sterling] range.

John Harley, Ernst & Young corporate finance partner specialising in the TMT market says: "We are always concerned when over 5 per cent of companies in a given sector issue profit warnings. The percentage of SCS and IT Hardware warnings exceeded this figure in Quarter 4 2000 and the sector's weak capital markets suggest that this trend will continue into 2001."

www.ey.com/uk

Business Intelligence to become priority for businesses

The increasing instability within the technology and new economy sectors will make business intelligence one of the major concerns for businesses over the next few years, according to "The Intelligent Enterprise: Competitive Use of Intelligence in Business", the latest report from the Buffer Group. The report concludes that the priority for businesses is now information management rather than information technology. The new economy is becoming so fast-moving and data-rich that businesses will be forced into increasing reliance on highly sophisticated and automated business intelligence (B1) software in order to anticipate changes in their sector. Eventually, BI will cease to be a series of computer-based tools and applications, focussing more on the integration of data and information from a variety of sources, including the decision-makers themselves. This will involve the increased use of rules-based agents embedded in workflow systems and the enhanced use of Enterprise Application Integration tools.

www.butlergroup.com

Integration Service Takes Off

IDC defines integration software as a set of technologies that enable organizations to control the quality of information by ensuring that it remains complete, consistent, and current across the entire portfolio of applications that define the operations of the business.

The ebusiness movement is fueling the rapid growth of the integration software market. Prior to ebusiness, the principal motivation for integration projects was one of internal efficiency. Now successful ebusiness mandates the implementation of complete and immediate consistency across all IT systems with which customers and partners interface even if the level of interface is indirect. Failure to deliver completely consistent information leads to lack of trust, and ebusiness cannot function in such an environment. The market at the moment bears Similarity to the relational database market in its early days. Good ideas are not enough, companies will need an aggressive marketing stance and make use of extensive partnering to create a broad sales front.

www.idc.com