IT Services Revenue and Marketing Budgets Rising in 2007

ITSMA Members Expect 19% Growth in Services Revenue, Higher Gross Margins, and Increased Headcount in Year Ahead

ITSMA, a membership organization that helps companies market and sell technology services and solutions, has released findings from its annual survey on services marketing budgets and trends. The survey, which was conducted with 44 participants from ITSMA member companies including Cisco, Dell, IBM, HP, Microsoft, Oracle, and SAP, shows that services marketers are optimistic about the year ahead, predicting increased budgets, increased gross margins, and increased headcount in their departments.

Services Revenues Growing, Marketing Budgets Increasing

ITSMA members reported services revenue growth of 21% in 2006, which is more than three times the amount the IT market grew as a whole. And the survey respondents expect that growth to keep right on going, predicting 19% services revenue growth for the year ahead.

Meanwhile, after a serious dip in services marketing budgets to just 1% of services revenue in 2005, survey respondents reported that, in 2007, services marketing budgets are expected to average 1.5% of services revenue. Furthermore, fifty percent of respondents reported that their budgets will grow in 2007, with only 7% saying that their budgets will decrease.

Gross Margins and Headcount Expected to Rise

Average services gross margins at ITSMA member companies hit 33.9% last year, up from 31.6% in 2005 and 29.3% in 2004. Sixty-eight percent of survey respondents believe that services gross margins will increase again in 2007; only 9% believe gross margins will decrease.

In addition, 54% of survey respondents reported that they expect to increase headcount over the course of the year. Only 15% indicated that the size of their department will shrink.

"2006 was a good year for IT services marketers, and 2007 is shaping up to be extremely positive as well," said Julie Schwartz, senior vice president of thought leadership and research at ITSMA. "With larger budgets and more staff, services marketers need to focus on using these additional resources to have a bigger impact on the business. They can do this by becoming a more strategic partner with business leadership, sales, and customers, fostering tighter cross-functional collaboration across the organization."

More Information

For more information on ITSMA's budget research, including budget allocations, top priorities, and key trends, visit http://www.itsma.com/research/abstracts/OLB070123.htm.

About ITSMA

ITSMA specializes in helping companies market and sell services and solutions. As a membership organization, we work with the world's leading technology and professional services firms to generate new business, strengthen customer loyalty, and increase brand differentiation. Our members include industry leaders such as Accenture, Cisco, EDS, EMC, Fujitsu, Hewlett-Packard, IBM, Microsoft, Nokia, SAP, Siemens, and Unisys. Through research, consulting, training, and community we provide the insight companies need to improve marketing impact, sales performance and business results. ITSMA is based in Lexington, Massachusetts, and has offices in the United States, the United Kingdom, and Japan. Learn more at www.itsma.com.