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Thoughts from the Field | 2H19 | Updated

>1050 CIOs and Enterprise IT Decision Makers Have Already Provided Their Updated 2H'19 Spending Intentions vs. Their Actual 1H'19 Spend

ETR Research | @ETRnews

| October 04, 2019

About this article: >1050 CIOs and high-level enterprise IT decision makers (ITDMs) - representing >$410B in annual IT spend - have already provided their updated 2H19 technology spending intentions in the past three weeks. The TSIS (Technology Spending Intentions Survey) measures enterprise spending intentions, market share and enterprise spend intensity, with a focus on how the largest organizations plan on allocating their 2H19 budgets versus how they actually spent on these vendors in 1H19. Below, we provide spend trends on dozens of technology companies. To access the full summary on ~80 technology companies (master subscribers only), please click the link below. To get access, contact us. 

CLICK HERE TO VIEW THOUGHTS FROM THE FIELD (must be logged in) 

This is the 37th time ETR has conducted the standardized TSIS series since January 2010. 96 respondents from the Fortune 100 have already participated in the survey. 

✹ Key Takeaways

[1] Overall slowing of IT spend is obvious. Though enterprise spend remains relatively healthy, we’re uniformly seeing a slowdown heading into year-end. This is evident among legacy and disruptive vendors, as well as across critical respondent subsamples – IT/TelCo, Top Tier Telco, Large Financials/Insurance, EMEA, G2000 and GPP – which is often valuable in understanding near-term events and IT trends. We’re seeing a shift in the data as enterprises indicate more cautious spend across their IT stack (via survey participants changing several of their responses from an Increase in spend to Flat spend for 2H19 vs 1H19). Below, we indicate the few vendors that look robust heading into year end, and which established vendors may disappoint.

[2] Adoptions are slowing back to pre-2018 levels – and Replacements are on the rise. We appear to be moving past the ‘digital transformation initiative’ we observed in 2017 and 2018 – that is, we’re no longer in the 'test & try everything' mode. Additionally, we’re seeing a combination of declines among legacy vendors and Replacements among newer/more disruptive names. With a few years of ‘digital transformation experience’, organizations understand what is worthwhile and what is not. Enterprise IT decision makers now know what they can and want to pull out of their architectures. Below, we indicate which emerging vendors are still gaining traction, which ones have slowed, and which legacy vendors are in decline.

[3] Microsoft appears to be extending its tentacles more than ever. This is impacting other cloud providers, collaboration vendors (Slack, Box, Dropbox, Atlassian, etc.), and APM vendors (New Relic, etc.). Further, with the launch of Azure Sentinel, SIEM vendors (IBM, Splunk, Elastic, etc.) may be next. It appears that CIOs feel more confident than ever in Microsoft’s road map. Below, we indicate which vendors are facing competitive pressures from Microsoft.

★ Dominant Public Cloud Players

Microsoft: Microsoft's spending intentions in the Cloud sector continue to be highly elevated based on updated 2H19 data from our sample of IT Decision Makers, though overall spending intentions are slightly decelerating vs 3 months ago. Additionally, Microsoft appears to be extending its tentacles more than ever, impacting collaboration vendors (Slack, Box, Dropbox, Atlassian), taking spend from APM vendors (New Relic), and now launching a product, Azure Sentinel, to go after SIEM companies (IBM, Splunk, Elastic). Further on the collaboration side, Microsoft Teams continues to gain traction in the enterprise, largely at the expense of Slack. On the acquisitions side, LinkedIn and GitHub spending intentions are flattening slightly into year-end, but market share for both has steadily increased since the summer of 2018. As highlighted a few months ago, Server spend continues to decelerate in Azure Cloud accounts (i.e., Cloud spend may be slightly cannibalizing Server spend). Net net, a few small holes heading into year end, but expected spend on Microsoft Azure Cloud continues to look overwhelmingly robust and they appear to be taking share from just about everyone.

AWS: AWS' market share among our sample of Fortune 500 organizations continues to uptick, now well past the ... . As for spending intentions, expected spend appears healthy for 2H19, though is now below year-ago levels. Among larger subsamples - Fortune 100 and Fortune 500 - spend is ... . Additionally, as stated earlier in the year, AWS' current spend data continues to fall short of the data captured in JAN18/APR18. Similar to the trends captured 3 months ago, spend on AWS ECS (Container Orchestration) continues to decelerate, likely due to the widespread pervasion of the Kubernetes framework. On the Data Warehousing side, AWS' DW products continue to look sound for 2H19 - AWS appears to be one of the few vendors not being significantly impacted by next-gen players (Snowflake, MemSQL, etc). On the Cloud side, spend looks healthy, but Microsoft continues to gain ...

Google Cloud Platform: Google Cloud Platform is showing little improvement in the Cloud Computing sector in both overall spending intentions and market share, as Microsoft Azure and AWS continue to run the show. Within ML / AI, which has historically been GCP’s most encouraging sector in our work, gains have ... . Analytics spend appears stable, while Container Platforms is seeing notable deceleration vs a year ago and three months ago, and Data Warehousing is similarly decelerating vs three months ago. It's important to note that we did run a Cloud study over the summer which indicated that GCP ...

To access full summaries, email us.  

▲ Established Vendors Trending Well

Workday: Overall expected spend for Workday has held steady at robust levels since 2H18, while Fortune 100 spending intentions having significantly accelerated vs last year and Workday has made further market share gains across Fortune 500/1000 orgs. Workday looks well positioned across almost all customer subsamples in our work, notably Healthcare / Pharma.

Proofpoint: Proofpoint’s updated 2H19 enterprise spending intentions are slightly down versus 3 months ago but remain elevated and inline with year-ago levels. Further, market share has accelerated notably vs this time last year. Spending intentions appear healthy among ... . Lastly, Proofpoint appears stable in Microsoft ... and is seeing additional spend among organizations using ...

Splunk: Splunk's updated 2H19 spending intentions look ... . Within the Analytics sector, Healthcare / Pharma and Financials / Insurance customers continue to indicate sound spending intentions for 2H19. From a 10K' view perspective, we are hearing some commentary from VENN events that vendor consolidation could disrupt the SIEM market ... . We also have some concerns longer term as cloud providers ...

CyberArk: Updated 2H19 spending intentions have accelerated vs 3 months ago, and are now inline with year-ago levels. As a reminder, we were positive-to-neutral on CyberArk in 1H19 and changed our outlook to neutral-to-negative based on the data captured in July. With the ...

To access full summaries & get a list of all established vendors trending well into year end, email us. 

▲ Emerging Vendors Gaining Traction

Okta: Okta’s outlook through year end appears strong as updated 2H19 spending intentions for Okta have improved vs the already impressive data captured three months ago, and remain up significantly vs last year, particularly among Fortune 500/1000 and Global 1000/2000 orgs. Market share and Adoption levels have rebounded to year-ago levels after having slightly dipped three months ago, while Replacements are virtually nonexistent among large enterprise cuts.

Zoom: Though showing pockets of deceleration vs three months ago among large enterprise cuts (Fortune 500/1000, Global 1000/2000), spending intentions for Zoom remain ... . That said, we're cautiously monitoring Zoom's health given Microsoft's looming presence in the space, and given the security concerns over Zoom's international R&D team.

UiPath: UiPath continues to ...

Tanium: Tanium's updated 2H19 spending intentions are accelerating vs three months ago and year-ago levels, driven by accelerating customer Adoptions. Further, Tanium retains one of the highest ... . In addition to a substantially increased market share and Net score among larger accounts vs 3 months ago (e.g., Giant Public + Private respondents), it is well positioned in shared accounts with ...

To access full summaries & get a list of all emerging vendors gaining traction into year end, email us. 

▲ Better Than Expectations

Pure Storage: Pure Storage's updated 2H19 spending intentions remain elevated vs 2H18, notably among Giant Public + Private (Global 2000 + Forbes Private 225 + Federal Agencies) and Fortune 1000 organizations. Further, Pure Storage is one of the few vendors with an accelerating Net score vs 3 months ago. On a negative note, market share continues to trend sideways (through market share among Retail / Consumer orgs continues to uptick).

To access full summaries & get a list of all vendors positioned better than expectations into year end, email us. 

► Established Vendors Flattening

Palo Alto Networks: Palo Alto Networks' updated Net score continues to trend ... , now below year-ago levels and at a ... . Updated 2H19 spending intentions are largely trending downwards due to customers indicating more Flat spend for 2H19 vs 1H19. We're also seeing some customers indicate a Decrease in spend vs 1H19, but overall Decrease rates remain low. ... customers appear to be the drivers behind Palo Alto's Net score ...

F5 Networks: In the Networking sector, F5 Networks' updated 2H19 spending intentions have improved vs 3 months ago, but continue to be below year-ago levels as more customers are Flat on spend for 2H. Customer subsamples appear mixed in the Networking sector - IT/TelCo customers appear to be further accelerating heading into year-end, while Fortune 500 and Global 2000 customers are decelerating in expected spend vs 1H19. As for the Information Security sector, we're seeing notable spend declines among Financials / Insurance customers and Fortune 500 customers, but again, IT/Telco spend looks healthy. F5 recently acquired NGINX, and their Net score is trending near the Networking sector average.

SAP: Within Enterprise Apps, Giant Public + Private spend with SAP On-Prem, Concur and Callidus is ...

To access full summaries & get a list of all established vendors with flattening spend into year end, email us. 

► Emerging Vendors Flattening

SailPoint: Overall spending intentions for SailPoint have shown ...

Coupa: Coupa's ... .That said, Coupa has shown notable ...

Dynatrace: Dynatrace is seeing similar spend compared to data from three months ago, though an uptick in Increasing spending intentions have been offset by expanded ... . Datadog and ... are accelerating in Dynatrace accounts and ... appears strong and stable, while ... is showing significant deceleration.

To access full summaries & get a list of all emerging vendors with flattening spend into year end, email us. 

► Established Vendors Decelerating

Atlassian: Atlassian's updated 2H19 spending intentions continue to show signs of cooling, and are now well ...

SolarWinds: Expected Fortune 500 spend with SolarWinds across Networking and Infrastructure Software has decelerated vs this time last year as more customers Flatten on spend, though market share has remained stable. Additionally, Replacement levels are worsening and Samanage is showing notable deceleration in Enterprise Apps vs three months ago.

Akamai: Updated 2H19 spending intentions for Akamai have taken a sharp downtick vs the overall positive dataset captured three months ago and earlier this year, largely due to more customers indicating they intend to ...

To access full summaries & get a list of all established vendors with decelerating spend into year end, email us. 

► Emerging Vendors Decelerating

PagerDuty: PagerDuty’s updated 2H19 spending intentions have ...

Zscaler: Zscaler's updated 2H19 spending intentions appear to have taken a step back, as the number of customers indicating a Decrease in spend for 2H19 vs 1H19 has nearly doubled in 3 months (Energy / Utilities, IT / TelCo and Healthcare / Pharma are largely the customers indicating a Decrease in spend). Further, Zscaler has decelerated in Palo Alto's accounts vs 3 months ago & year-ago levels. That being said, Zscaler remains well-positioned in shared accounts with ...

To access full summaries & get a list of all emerging vendors with decelerating spend into year end, email us. 

▼ Competitively Pressured

Slack: Slack's 2H19 spending intentions have taken yet another leg down due to Replacement rates hitting an all-time high in our work. Further, updated 2H19 spending intentions among Fortune 100/500/1000 and Financials / Insurance customers have further decelerated, driven by elevated Decrease and Replacement rates. The culprit? Microsoft Teams continues to gain wallet and mindshare in the enterprise as Slack trends sideways. Though Slack is stable in Microsoft's accounts vs 3 months ago, Slack's Net score is down substantially vs year-ago levels (All customers). Among Financials / Insurance organizations using Microsoft Teams, Slack's updated 2H19 Net score is now negative.

New Relic: New Relic's spending intentions continue to decelerate, driven by ~15% of end users planning on Replacing the vendor by the end of year. Across nearly all subsamples (>15 citations), New Relic is decelerating vs 3 months ago and year-ago levels. As noted in our APM research note from August: "we’re seeing a slowdown for APM vendors (i.e., New Relic, Datadog, Dynatrace and AppDynamics) heading into 2H19, especially among organizations/customers adopting and accelerating spend with public cloud vendors (AWS, Azure and GCP). CIO commentary corroborates this narrative - APM pure plays are next in line to be negatively impacted by Public Cloud providers (AWS, Azure, and GCP)." That trend largely continues to hold based on updated 2H19 spending intentions, especially for New Relic, as does New Relic's decelerating data among peers and organizations spending with Splunk.

Tenable: Tenable continues to look challenged for the remainder of 2H19 ...

Dropbox: Dropbox's enterprise market share is at a near two-year low in our survey work. Updated 2H19 spending intentions, though stable vs 3 months ago, continue to be well below year-ago levels. Further, 36% of IT Decision Makers are indicating a Decrease in spend for 2H19 or plan on Replacing Dropbox. Additionally, when we benchmark the data against other vendors in the Productivity Apps sector, Dropbox has the worst Net score in the sector. Cloud providers (AWS, Azure, GCP), Microsoft Teams and Slack all appear to be taking share from Dropbox.

To access full summaries & get a list of all vendors facing competitive pressures, email us. 

▼ SMID That Could Decelerate Further

Cloudera / Hortonworks: Cloudera and Hortonworks' Net score has hit an all-time ...

Zendesk: Zendesk's Replacement rate is again accelerating vs 3 months ago and is now inline with the Replacement rates captured earlier in the year. Though Net score is somewhat stable vs 3 months ago, updated 2H19 spending intentions are still well ... . As a reminder, we conducted a drill down survey in January 2019 that indicated large organizations ... their usage of Zendesk this year and felt the vendor was largely ...

To access full summaries & get a list of all SMID vendors that could further decelerate into year end, email us. 

▼ Networking Vendors Flattening/Decelerating

Juniper: Juniper's updated 2H19 spending intentions continue to be sour, with >20% of end users Decreasing spend or planning to Replace Juniper by year end ...

To access full summaries & get a list of all Networking vendors with flattening/decelerating spend into year end, email us.  

▼ Legacy Encountering Further Declines

Oracle: High Replacement levels continue to be concerning ...

IBM / Red Hat: Updated 2H19 spending intentions for IBM (excluding Red Hat products) are seeing a bounce back from the poor spend captured earlier this year and are largely flat vs last year among Fortune 100/500 and Giant Public + Private orgs, driven by renewed strength in Cloud Computing, ML / AI, Container Platforms and IT Services. However, Analytics, Data Warehousing and Business Processes spend all continue to trend lower among these large enterprises, and market share has shown continued erosion over the past year across most sectors. Red Hat’s core Infrastructure Software, Server and Virtualization spend has taken a ...

Citrix: Amid notable ...

NetApp: NetApp’s updated 2H19 spending intentions appear largely ... . Further, Fortune 100 / 500 spending intentions are decelerating into year-end (the number of ... customers citing NetApp is down 50% from this time last year). ... continues to look the best positioned within NetApp accounts.

To access full summaries & get a list of all legacy vendors declining into year end, email us.  

✹ More Frequently Discussed Vendors

Nutanix: Among All respondents, updated 2H19 spending intentions for Nutanix ...

Fortinet: Fortinet's spending intentions have not fully recovered from the decelerating data captured earlier in the year. That said, Fortinet's updated 2H19 spending intentions are slightly higher vs 3 months ago (though still below year-ago levels). Areas of strength include ...

To access full summaries & get a list of all frequently discused vendors (Cornerstone OnDemand, Rubrik, Cloudflare, RingCentral, Arista Networks, GitLab, Netskope, MemSQL and more), email us.