IT executives approach budgets with caution

Extreme caution is likely to pervade the corporate budgeting process for much of 2002 as executives ponder what’s needed to bring enterprises out of the economic slump.

Many chief information officers (CIOs) and chief technology officers (CTOs) are looking “to understand where the leverage is and where to invest to accelerate out of the downturn,” observed Jon Ricker, CIO of Limited Technology services, the IT arm of clothing behemoth The Limited in Columbus, Ohio.

A recent CIO poll undertaken by Wall Street analyst firm Morgan Stanley Dean Witter & Co. backs the notion that an era of second-guessing is about to ensue.

Predicting a modest two per cent growth overall in IT budgets, the firm noted a significant spike recently in the number of CIOs who said they were re-evaluating spending.

Specifically, in November, 67 per cent of CIOs polled said they were rethinking their IT outlays, up from 52 per cent in October.

“Budgets should stabilize next year, however the planning process has become more dynamic,” Morgan Stanley concluded.

That is, enterprise officials are expected each quarter to take a hard look at the IT investments they have planned.

In so doing, they’ll favour “smaller, more focused projects” at the expense of “boil-the-ocean” overhauls of systems, according to the poll.

Still, things have at least improved to the point where decision-makers feel safe making IT projections, said Carol Bartz, CEO of Autodesk Inc., a computer-aided design (CAD) tools provider.

“I think we now have a feeling for the bottom, and what that means is that [executives] feel comfortable forecasting budgets,” she said.

Further, Bartz predicted that corporate research and development (R&D) budgets would hold their own.

“How many times have we read that companies cutting five to 10 percent of their workforce are not touching R&D?” she said.

E-commerce, security and EAI (enterprise application integration) topped Morgan Stanley’s list of likely enterprise priorities. Storage hardware and ERP were the next areas of probable interest.

New InfoWorld research pointed to a pragmatic CTO interest in maintenance and steady expansion and infrastructure. Also cited was a desire to “retire systems and vendors which over-complicate our business operation,” offered one CTO anecdotally.

Yet, contrary to recent polls and surveys, Limited is overseeing a “holistic” investment in IT to enhance the “customer experience” and CIO Ricker cautioned enterprise officials against an overly conservative attitude.

“I think there will be those that will pull in their horns,” he said. “But that’s a big mistake, because there will be others in all industries that, like us, will be positioning for the next cycle.”