Businesses are snapping their wallets shut, at least when it comes to software spending - usually a good leading indicator of economic growth.

One key benchmark, the ChangeWave corporate software spending survey, has seen a shift into negative territory for the first time in years.

In its January, 2008 survey results, ChangeWave says that better than one-in-five respondents (22%) now say their company will spend less for software over the next 90 days compared to the previous 90 days -- 8 percentage points worse than our previous survey in October 2007.

Just 16% of respondents say their company will spend more -- 2 points worse than previously.

A total of 1,802 respondents involved with software purchasing in their company participated in the survey.

"These latest software results -- combined with our recent consumer spending survey - should end the 'are we or aren't we' in economic recession debate once and for all," says Tobin Smith, founder of ChangeWave Research and editor of ChangeWave Investing. "Now both businesses and consumers are singing from the same 'cut-thy-spending' hymnal."

Nearly one-in-10 respondents (9%) cite "a general slowdown in business conditions and capital budgets" as the foremost factor driving their companies purchasing decisions -- a number that is up 3 points since October 2007 and triple the percentage of a year ago.

In a follow-up question, respondents were asked if there had been any adjustments made to their first quarter capital budgets over the past 90 days.

Twice as many said their capital budgets were adjusted lower (22%) than said they were increased (11%) -- a powerful indicator of a very tough corporate spending environment.

The survey also looked at specific software categories and found Security Software (16%; down 7-pts) to have experienced the biggest slowdown since October 2007. Business Intelligence (8%; down 2-pts) and Document/Content Management (5%; down 2-pts) software also look softer.

On a somewhat brighter note, Virtualization (9%) and Enterprise Resource Planning (7%) spending appear similar to that of the previous survey.

But overall, the survey results show clear signs of a recession in business spending for the first quarter of 2008, and are a striking confirmation that we're now sailing through a period of heavy economic turbulence.
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William Dorn

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