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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: Jim Willie CB who wrote (39315)	7/23/2001 4:42:52 PM
From: stockman_scott	Read Replies (2) \| Respond to of 65232

Study: Despite Appearances, IT Spending Not Stalled Monday July 23 01:07 PM EDT By Erika Morphy, www.CRMDaily.com Strong anecdotal and statistical evidence indicates that companies are cutting back on IT capital spending and slashing spending on back-office operations, customer relationship management, supply chain management and enterprise resource planning systems. The U.S. Department of Commerce reported recently that business spending on capital equipment, which grew an average 15 percent annually for the last three years, contracted in the fourth quarter of 2000. Spending on CRM, ERP and supply chain applications exhibited the sharpest drop, falling 6.4 percent in the first quarter of this year from the fourth quarter of 2000. But a new Gartner Group (NYSE: IT - news) study suggests otherwise. According to the study, "IT Spending Survey Shows Steady Growth in IT Budgets," some 56 percent of respondents surveyed between March and June of this year plan to spend more on information technology in 2001 than they did in 2000. Despite the economic turmoil of the last seven months, "smart organizations realize they need to continually refine and continually improve their internal business processes if they want to stay competitive," Jeremy Grigg, research director of business management for IT at Gartner, told CRMDaily.com. 'Type A' Moving Ahead Among other discoveries, Gartner found that the current economic downturn has not deterred "Type A" or leading IT adopters from increasing their budgets as a percentage of revenue. Government, which some consider "Type A" because of e-government initiatives, showed an expected increase of 18 percent between 2000 and 2002, followed by telecommunications services, which is expected to increase IT budgets as a percentage of revenue by 13.9 percent. Other sectors, however, clearly are cutting back on IT investments and even routine spending, according to Gartner. Utilities and construction are expected to reduce such spending and investments by 15 percent and 13.5 percent, respectively. Perhaps the greatest change in recent months has been a shift in spending priorities as companies redirect and concentrate their more limited IT resources. According to Barbara Gomolski, research director for Gartner: "Discretionary spending -- which includes expenses surrounding re-engineering and consulting -- is now a smaller piece of the budget. Baseline -- or nondiscretionary expenses -- now consume a larger percentage of the IT budgets.” CEOs Not Applying Brakes? Gartner is not the only research organization to uncover spending patterns suggesting that companies are going forward with IT investments. The Business Council, a Washington, D.C.-based group of some of the largest U.S. companies, reported a few months ago that despite the faltering economy, only one-third of U.S. chief executive officers planned to cut spending on high-tech projects, while more than 10 percent intended to accelerate such investments. Almost all the respondents noted that their IT spending had increased over the last few years and that productivity and efficiency had improved as a result.