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CIOs Will Do More With the Same or Less in 2003

  Industry Statistics published in DM Direct Special Report
February 4, 2003 Issue
  By DMReview.com Web Editorial Staff

CIOs anticipate increased demands on their information technology (IT) departments in 2003, but few will increase IT spending to address the additional workload, according to CIO Magazine's September Tech Poll. The majority (86 percent) of executives surveyed reported a significant backlog of application development projects and only 11 percent of those surveyed will increase spending in response, according to a report entitled "CIOs will do more with the same or less in 2003" by Lorraine Cosgrove Ware.

The Tech Future Growth Index (TFGI), which projects IT activity over the next 12 months, rose slightly (10 percent) from 1.9 in August to 2.1 in September. The TFGI had been as high as 2.9 in May of this year and 6.0 eighteen months ago in February 2001. Panelists once again cited weak profits as the key factor influencing the slowdown in IT spending.

Figure 1: Projected Spending During Third Quarter 2003 Compared to Second Quarter

While IT budgets are expected to increase by 5.7 percent in the coming 12 months, up 16 percent from last month, the percentage of executives who plan to increase IT investment across eight technology categories slipped to a 10-month low of 38.7 percent in September. IT initiatives that have short-term return on investment (ROI) and that clearly demonstrate business value - of helping to generate new revenue or reach more customers, for example - are more likely to get funded than those that don't.

Figure 2: Perceived Applications Backlog by Executives

Panelists indicated that they will allocate 15.2 percent of their total IT budgets to developing business over the Internet (B2B2C) in the coming year, up 14 percent from the investment levels reported last month. Executives further reported that they expect to generate 12.9 percent of their company's revenues from the Internet in the coming 12 months. For the past 12 months, panelists said that only 9.9 percent of their company's revenue came from the Internet. This represents a 30 percent increase in expected revenue from the Internet.

In a separate survey also conducted by CIO magazine in May of this year entitled "IT Planning for the Economic Recovery," 251 IT executives reported that integrating systems and processes (61 percent), external customer service/relationship management (49 percent) and enabling/enhancing e-commerce (39 percent) would be the top three strategic, IT-driven priorities as we emerge from the recession.

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 July, 284 executives responded to the survey. In terms of title, 87 percent of panel members were CIOs and 9 percent were CEOs, COOs or presidents of corporations. The remaining 4 percent held other senior management titles.

Almost all (94 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 (17 percent), manufacturing (14 percent), finance (12 percent), health care (11 percent) and state or local government (5 percent). In terms of company size, 17 percent of the respondents were from companies with 5,000 or more employees.

The complete September CIO Magazine Tech Poll can be found at http://www.cio.com/info/releases/09techpoll_results.html.

For more information on related topics visit the following related portals...
Strategic Intelligence.

This piece has been brought to you by the DMReview.com Web Editorial staff.

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