Optimism's Back!

At long last, business-technology managers are again feeling confident about the economy, and they're more positive about IT spending in coming months.
After four quarters of growing pessimism about the economy and its impact on their companies, business-technology managers have started to crack a smile. Amid encouraging economic data and improving financial results--and the arrival of spring--there's a marked increase in positive thinking, according to the latest results of InformationWeek's IT Confidence Index. For now, the mood improvement is only that: a psychological lift. At two-thirds of companies, caution continues to throttle plans for IT spending.

Hey, we'll take what we can get. The uptick in the IT Confidence Index, a snapshot of attitudes among InformationWeek readers about the economy and its impact on their IT spending, is a step in the right direction. The index leaped 46% in March, to a level not seen in nine months. Only a third of the 300 business-technology executives surveyed express a positive outlook about their companies' current IT spending plans. But even here, the outlook is a bit brighter: 38% have a positive feeling about IT spending in the three months ahead.

Just how widespread is the newly felt optimism? Two-thirds of respondents express positive feelings about current economic conditions, compared with 45% who felt that way just three months ago.

A few companies actually are ramping up IT spending, aiming to differentiate themselves from the competition. That's the plan at manufacturing distributor W.W. Grainger Inc. The Lake Forest, Ill., company increased its tech budget 10% this year after flat spending in 2000 and 2001. Revenue last year decreased 4% to $4.8 billion compared with the year earlier, but the company managed to increase income 21%, to $211.2 million, a bump company officials attribute to organizational efficiencies and supply-chain technology that helped reduce costs. The company announced in February a $200 million redesign of its logistics network that it expects will increase future revenue. "If you have financial resources, a recession is a good time to invest so when the rebound comes you can excel," says George Rimnac, VP and chief technologist.

John Waraniak, executive director of E-speed and collaborative commerce at Johnson Controls Inc., agrees. The auto-supply company held to its IT budget even as the downturn cut deeply into auto sales for much of last year and immediately increased IT spending when the industry started showing signs of a turnaround in the fourth quarter of 2001. In that quarter, the company reported sales of $4.8 billion, an 8% increase over the same period the previous year. Says Waraniak, "It's all about continuing to spend so we can get further ahead of the competition."