State of the Market IT Spending Directions Stephen Minton Vice President IDC Worldwide IT Markets

State of the Market Recovery remains on course according to previous conservative expectations Business leaders remain cautious; spending focused on infrastructure upgrades, some new projects Wild cards : Oil, Global Economy, Exchange Rates Tax incentives could spur US demand in Q4; but impact likely outweighed by other factors Hot CIO focus areas : Infrastructure, Security, CRM, WLAN, Business Intelligence New shift to “Dynamic IT” adoption and utilization

Worldwide IT Spending Growth % Growth Source: IDC Black Book Q3 2004

IT Spending Growth by Region Source: IDC Black Book Preliminary Q3 2004

Market Growth Forecasts, Q Source: IDC Black Book Q3 2004

Likelihood of IT Budget Increases Source: IDC Market Watch Index, Q – Q3 2004

Drivers for Increased IT Spending Source: IDC Market Watch Survey Q3 2004

Main Focus for IT Department Source: IDC Market Watch Survey Q3 2004

Yesterday’s Network

Today’s Network

Tomorrow’s Network

Complexity of systems/architectures

End-users start asking difficult questions IT Doesn’t Matter Nicholas Carr Harvard Business Review May 2003

Enterprises have always been Dynamic… Dynamic IT Capability Human Capital Customer Care Store/Branch Ops Performance Management Sales & Marketing Supply Chain Innovation/PLM Production

Dynamic Enterprises Needs Dynamic IT Dynamic IT Capability Human Capital Customer Care Store/Branch Ops Performance Management Sales & Marketing Supply Chain Innovation/PLM Production

Where to Start? – Business Execs’ Priorities for Dynamic IT Source: IDC’s LOB Executive Survey, June 2004 Q: Most important IT improvements to better support business? ¥£ € $

Two focus areas for Dynamic IT transformation Business Strategy Automation & Execution Responsiveness to Market IT Operations Automation & Management Operational Efficiency End-to-End, Dynamic Management Business Monitoring & Analytics Business Process & Application Automation Information and Data Services Integration, Event & Deployment Services Collaboration & Communication Services Access & Interface Services Service Level Management & Automation Metering, Measurement & Charge-back Security Infrastructure Virtualization Infrastructure Provisioning Resource Management & Monitoring Platform Management & Monitoring

Piecing Together the Big Picture Business leaders are still nervous — must play to cost- conscious market with appropriate message IT spending growth will continue to recover with overall economy and business investment, but users are focused on key priorities / dynamic IT IT spending will be evaluated throughout the year, wild card factors could disrupt outlook