Is corporate IT spending showing signs of life?

Jefferies enterprise software analyst Katherine Egbert thinks so. She issued about a flurry of research notes today, saying various nice things about the improving climate, lifting targets and estimates for an assortment of stocks.

Egbert writes that a survey of IT security software resellers found signs of a pick-up: she writes that on average the 71 VARs surveyed now see 2009 spending up 9 percent, up from 7 percent in a comparable survey one quarter earlier. She writes that Q4 should show “a strong budget flush,” with a small majority expecting higher year-over-year sales in the quarter.

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In theory, getting users to ditch one Internet search engine for another should be an easy sell. But doing so is likely to cost Microsoft (MSFT) every penny of the roughly $100 million it plans to spend on an advertising campaign that starts Wednesday for its new Bing search engine.

In economist speak, there are virtually no “switching costs” for a consumer that wants to change from one search engine to another, other than the burden of typing Bing.com into a Web browser instead of Google.com (GOOG). That’s nothing compared to the switching costs of a company changing a complex piece of enterprise software, which may require employee retraining, or a consumer who switches to a new operating system, requiring the purchase of new application programs.

In reality, of course, habit and inertia make it very challenging for a company like Microsoft to improve its 8 percent share of the search market against rivals like Google and Yahoo (YHOO). There’s also the problem that most people say they’re happy with their experience on Internet search engines today, though some of their online behavior–for example, the large amount of time they spend on typical searches–suggests otherwise, according to Microsoft’s research.

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Nothing warns the heart of the Street more than a nice cost-cutting story.

Merrill Lynch analyst Raimo Lenschow this morning raised his rating on the German enterprise software giant SAP (SAP) to Buy from Neutral, upping his price target to $43.80 from $38.30, “predicated on the 2009 cost-saving story,” which he says the market isn’t getting. To reflect the increased belt-tightening, he upped his EPS estimates for the company to 2.11 Euros a share from 1.91 for 2009; for 2010, he goes to 2.31 Euros, from 2.21.

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