CIO survey shows slight spending pickup

Chief information officers surveyed by CIO magazine say their spending plans are starting to pick up, according to the June results of CIO’s monthly Tech Poll. Respondents predicted their IT budgets will grow by an average of 5.6 percent over the next 12 months, up from the 3.3 percent average projected in May.

Security software remained the strongest of the eight IT sectors covered by the poll, with 54.4 percent of respondents planning to increase spending. Outsourced IT services was the weakest area, with 27.7 percent reporting plans to increase spending but 27.1 percent saying they will decrease spending. Telecom equipment also attracted low interest, with 28.9 percent planning spending increases and 22.5 percent planning reductions.

CIO magazine’s survey panel includes 5,000 executives, primarily CIOs. In June, 94 percent of the survey’s several hundred respondents were from North America, with large enterprises representing 20 percent of the results. Respondents work in a wide assortment of industries, including manufacturing, finance, government, health care and technology services. CIO magazine is a publication of International Data Group Inc., the parent company of the IDG News Service.

Projections on when IT spending will significantly turn around were hazy, with the plurality of respondents, 30.3 percent, opting for “beyond 2003.” Eighteen percent said it has already picked up, while 26.1 percent forecast an industry-wide pickup for sometime in the last half of 2003.

Still, when asked to compare their expected IT spending against the previous quarter’s, 7.1 percent of respondents said their spending would be “significantly higher,” the strongest response received for that question so far this year. Twenty-five percent said spending would be “higher.” The group of respondents anticipating “lower” or “significantly lower” spending dropped to 15.8 percent, the lowest result in that category this year.

Prudential Securities Inc. Chief Investment Strategic Ed Yardeni, one of the poll’s creators, largely attributes projected spending increases to a new U.S. tax plan allowing small businesses to write off US$100,000 in capital equipment investments. That change has motivated businesses that had previously frozen their tech spending, he said.

Respondents cited weak profits as the top obstacle to spending growth. Other factors mentioned include tight financial conditions and the sufficiency of existing capacity.