Amid Tech's Bleating, SAP's Got Bark

Despite the tough economy, firms that sell software for managing business functions and IT systems are among the best-positioned for 2009, UBS finds.
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Despite the ravages of a tough economy, tech companies that sell software for controlling different business functions and managing IT systems are among the best-positioned for 2009.

These are the results of a recent

UBS

survey of 100 chief information officers (CIOs) in the U.S. and Europe, which painted an otherwise depressing picture of the state of IT spending. CIOs are predicting a 2% decline in IT spending in 2009, according to UBS, even lower than recent downbeat estimates from tech analyst firms

Forrester

and

Gartner

.

Software maker

SAP

(SAP) - Get Report

, however, is bucking the downward trend for IT spending, according to UBS, which found that the firm provoked a much more positive response from CIOs than rivals

Microsoft

(MSFT) - Get Report

,

Oracle

(ORCL) - Get Report

and

IBM

(IBM) - Get Report

.

Of those four firms, SAP alone was expected to register a net spending increase in 2009, with CIOs foreseeing net decreases in their spending on Microsoft, Oracle, and IBM technology. The German software company, which sells Enterprise Resource Planning (ERP) products for controlling business processes such as purchasing and customer service, also sells

online software

for large businesses.

UBS found that firms in the manufacturing sector, in particular, expect to spend money on ERP next year, with SAP and even its rivals potentially reaping the benefits. SAP's stock is currently trading around $33, well below its 52-week high of $59.42.

Despite the expected decline in IT budgets, UBS found that systems management will also prove relatively popular in 2009, with respondents expecting to increase their spending by 1%. Within this sector, software that automates data center tasks, such as server management, will rise 2% as users try to lower their personnel costs.

"We expect

BMC

(BMC)

and

Hewlett-Packard

(HPQ) - Get Report

to be the primary beneficiaries of this spend as they have the market leading solutions in this space," wrote Heather Bellini, an analyst at UBS, in a statement.

H-P shares are priced at around $34, well below their 52-week high of $52.90, although the company

beat

Wall Street's revenue estimates in its recent fourth-quarter results, and is seen as well-equipped to weather the current economic storm.

Shares of BMC, which recently announced plans to cut

6%

of its workforce, are trading around $26, compared to their 52-week high of $40.87.

CIOs however, were lukewarm in their response to some of the supposedly hottest IT trends.

Spending on

virtualization

software, which has been touted as the next big thing in the tech sector, is expected to slow in 2009. Despite being championed by

VMware

(VMW) - Get Report

and Microsoft, UBS found that most IT chiefs expect virtualization spending to be flat. Overall, virtualization spending growth is expected to slip from 10% in 2008 to 6% in 2009.

Virtualization, which lets users run multiple operating systems on the same hardware, may have driven VMware's 2007 $1.7 billion IPO, although relatively few CIOs cited the company specifically in UBS's survey.

"This may suggest that while virtualization is a trend that is no doubt here to stay, it still does not have the collective mindshare as many might think," wrote Bellini.

Despite UBS's overall findings, the investment research firm found that the overall IT spending picture is not all doom and gloom. Even though around 60% of respondents expect tech spending to decrease next year, almost a third told the investment research company that their tech budget will increase, with the remainder foreseeing no change.