CIO Survey: 2001 Corporate IT Spending To Rise More Moderately Than in 2000

Computerworld - The results of a survey of 150 CIOs by Morgan Stanley Dean Witter & Co. show that corporate IT budgets are expected to increase at a more modest rate in 2001 than they did in 2000.

	Losing Steam Average IT budget increase in 2000: 12% Average IT budget increase in 2001: 8% Source: Morgan Stanley Dean Witter & Co., New York

Those results came as no surprise to Ed Tobin, CIO at Colgate-Palmolive Co. in New York, who said he's cutting his technology budget this year, mainly as a result of the efficiency of recently installed enterprise application integration systems.

"We've got a strategy covering several years where we've been implementing several new systems, such as SAP, all around the world and consolidating by decommissioning our legacy systems," he said.

Jack Cooper, CIO at Bristol-Myers Squibb Co. in New York, said his IT spending will remain level only because his company installed Y2k-compliant software in 1999.

Bristol-Myers installed SAP AG's R/3 enterprise resource planning software and Ariba e-commerce applications.

"That saved us a lot of money," said Cooper.

Cooper said technology initiatives in 2001 will focus on productivity issues, including supply-chain management and business-to-business e-commerce. He added that his shop is also planning to equip the Bristol-Myers sales and marketing force with more laptops and wireless communications devices and to implement video streaming.

"In research and development, we're looking for new compounds and molecules that are effective in treating new diseases," he said. "A lot of those activities are becoming more automated. Scalability requires us to look for automated solutions."

Charles Phillips Jr., a technology analyst at Morgan Stanley, said he agreed that the Y2k bubble contributed to spending on technology being front-end-loaded in 2000.

In addition IT spending soared in the frenzy of e-commerce activity that took place before concerns about the viability of many dot-com ventures dampened the enthusiasm for them, he said.

Wary of Overspending

Economic concerns have left many corporate leaders wary of overspending on IT, Phillips added. In fact, 12% of the CIOs who responded to the survey said they recently downsized their IT budgets because of the slowing economy. And 14% said they plan to keep a close eye on the economy and spend money more gradually in the first half of next year.

Tom Millikin, a spokesman for Procter & Gamble Co. in Cincinnati, said the company's IT budget has been growing moderately but is expected to change dramatically in 2001. Expenditures for infrastructure, for example, will level off or decline, while spending on Web-based applications will increase.

"Also, most organizations have an insatiable appetite for bandwidth, and we're no different," he added. "We'll continue to invest in bandwidth around the world."

The Morgan Stanley results are in line with a recent Computerworld survey of 100 IT managers at organizations that have at least 400 employees.