CIOs Keeping A Tight Hold On Their Wallets

CIOs won't be spending all of their already-slim 2002 IT budgets. A survey of 100 IT executives conducted by AMR Research in October found that, on average, companies will spend only 92% of their IT budgets by year's end. The shortfall is largely because of cutbacks in personnel, training, outsourced services, and telecommunications capacity during the year. And IT budgets for 2003 will increase only a miserly 0.2%.

The survey also found that spending for data warehousing, enterprise performance management, security, supply-chain management, and physical infrastructure such as servers, storage systems, and networking technology top IT executives' budgets for next year. The latter isn't surprising, given that the lousy economy has pushed down prices for infrastructure products, according to AMR, which released the survey findings at its fall executive conference in Boston this week.

The conference featured a CIO roundtable whose participants were somewhat more upbeat than the survey results. Donald Martin, CIO at Armstrong World Industries Inc., expects his IT budget to increase 5% next year, with data warehousing and supply-chain management systems on his to-do list. Ace Hardware Corp.'s IT budget will increase 9% from this year's spending level, IT VP Mike Altendorf says. And General Dynamics Corp.'s C4 Systems division will modestly increase its IT budget in 2003, says Robert Dutton, VP of information technology and systems, including spending to upgrade its PeopleSoft Inc. human-resources management software and to install Oracle11i financial applications.