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CIOs Not Ready to Spend
Economic indicators signal recovery, but CIOs are not spending on IT
BY LORRAINE COSGROVE WARE
DESPITE RELATIVELY GOOD news about the strength of the economy, CIOs continue to keep a tight hold on the IT purse strings, according to CIO magazine's February Tech Poll. While economists reported on Wednesday that the U.S. GDP grew by 1.4% in the fourth quarter last year—adjusted upward from the .2% growth rate reported in last month, Tech Poll panelists don't expect IT budgets to loosen until later this year. Close to 70% of the IT executives surveyed do not expect IT spending to pick up until the third quarter of 2002.
Recovery in IT Sector May Lag Overall Economy
According to the 300 executives surveyed, IT budgets are expected to grow by 3.2% on average in the coming 12 months—down from 3.8% reported in January and off 72% from levels reported one year ago. Additionally, CIO's Technology Future Growth Index (TFGI), which measures IT activity and the overall health of IT budgets over the next 12 months, slipped slightly from 1.4 in January to 1.2 in February. The TFGI was as high as 6.0 in February 2001.
While many economists estimate the U.S. economy will continue to grow by 1.5 to 3% in the current January-March quarter, Federal Reserve Chairman Alan Greenspan cautioned on Tuesday that the recovery will be mild, and CIOs are heeding the warning. More than half of the executives surveyed report that IT budget adjustments will likely occur three to six months after company profits show signs of improvement.
CIOs Forecast Increased Spending on Security and IT Services
Panelists indicated that investment in security and outsourced IT services would increase. The portion of respondents that said they would increase spending on outsourced IT services rose 15% from 24% in January to 28% this month. When asked about changes to security software spending, a new question to the Tech Poll, 60% of respondents indicated they would increase spending in this area.
Each month, CIO magazine in partnership with Deutsche Banc Alex. Brown and Ed Yardeni, surveys a panel of senior executives on current and future IT spending as well as other IT issues. In January, 300 executives responded to the survey. In terms of title, 89% of panel members were CIOs and 7% were CEOs, COOs or presidents of corporations. The remaining 4% held other senior management titles.
Almost all (97%) of the panel members were based in North America. Companies included in CIO's Tech Poll represented a broad range of industries, including manufacturing (17%), technology services (14%), finance (11%), health care (9%) and distribution (4%). In terms of company size, 28% of the respondents were from companies with 5,000 or more employees.
The complete February CIO Magazine Tech Poll can be found at www.cio.com/info/releases/030102_techpoll.pdf.
Previous poll results can be found at www.cio.com/info/releases.
Posted: March 1, 2002 |
