CIOs remain cautious on IT spending

CIOs are relying on their organizations’ operational efficiencies more than macroeconomic indicators to trigger a pick-up in IT spending, according to CIO Magazine (U.S.)’s June 2002 Tech Poll. Only 5 per cent of executives surveyed cited an improved macroeconomic environment as the number one factor that would increase their technology spending, and 28 per cent listed operational effectiveness within their organization.

While 30 per cent of the Tech Poll panellists expect their IT spending in the third quarter of 2002 to increase from second quarter levels, most don’t expect meaningful improvement until later this year and into 2003.

CIO Magazine‘s June Tech Poll shows IT budgets are expected to increase by 5.9 per cent in the coming 12 months, down 20 per cent from 7.3 per cent reported in May. Panellists reported that IT budgets increased by only 0.2 per cent on average in the past 12 months, down significantly from the rate of 3.2 per cent in May.

The CIO Magazine Tech Future Growth Index (TFGI), which projects IT activity over the next 12 months, also slipped this month to 2.4, down from 2.9 in May. The TFGI has been rising and falling (from highs of 2.9 to 2.4) for the past four months after dropping to a low of 1.2 in February of this year.

Internet B2B2C spending and revenue held steady month to month. Tech Poll panellists plan to spend 15.3 per cent of their IT budgets on developing business over the Internet (B2B2C) during the next 12 months, a slight improvement from the 13.2 per cent reported spent over the previous 12 months.

Panellists expect 11.8 per cent of their overall revenues to come from the Internet in the coming 12 months, compared to 9.7 per cent in the previous 12 months’ also an improvement over last month’s levels of 11.6 per cent and 8.6 per cent respectively. In a vote of confidence for B2B purchasing, panellists plan to purchase 21 per cent of their materials, supplies and parts over the Internet during the next 12 months, up from an estimated 17 per cent over the past 12 months.

Securing information assets remains a priority for IT executives, with the majority (60 percent) saying they will increase future spending on security software.

Each month, CIO Magazine in partnership with Deutsche Bank Securities and Ed Yardeni, chief investment strategist, Prudential Securities Inc., surveys a panel of senior executives on current and future IT spending as well as other IT issues. In May, 307 executives responded to the survey. In terms of title, 89 per cent of panel members were CIOs and 6 per cent were CEOs, COOs or presidents of corporations. The remaining 5 per cent held other senior management titles.

Almost all (97 percent) of the panel members were based in North America. Companies included in CIO’s Tech Poll represented a broad range of industries, including technology services (16 percent), manufacturing (14 percent), finance (13 percent), health care (8 percent) and state or local government (8 percent). In terms of company size, 17 per cent of the respondents were from companies with 5,000 or more employees.