IT spending in check

The results of two user surveys conducted by financial analyst firms agree: IT spending growth next year will be modest at best.

SG Cowen's Computer Industry User Survey, released last week at the firm's 2002 Information Technology User Survey, projects that IT budgets in 2003 will be 3.4 percent bigger than those this year.

Companies with less than US$250 million in revenue will increase their IT budgets an average of 8 percent, while companies with greater than $250 million in revenue will see only 1.8 percent growth.

"It is extremely clear that most of the recovery we're looking at is going to be driven by smaller organizations," said Richard Chu, SG Cowen managing director, at the Boston event.

Meanwhile, the latest installment of Morgan Stanley Dean Witter & Co.'s regular CIO Survey paints an equally conservative picture: "We believe that software spending will continue to be constrained through 2002 followed by a modest recovery in 2003," the firm wrote. "We believe that overall tech spending should lag the pace of a general economic recovery due to cautious buying behavior and the lingering effects of overbuying in the past."

Security and disaster-recovery projects ranked most important among SG Cowen's 700 survey respondents. "Everything else pretty much paled in comparison," Chu said.

The 225 respondents to Morgan Stanley's survey said their top three priorities are application integration, security software, and enterprise resource planning software and upgrades.

Both surveys addressed the Linux phenomenon.

Linux continues to creep into corporations, Morgan Stanley says. In its survey, 29 percent of respondents indicated they own Linux servers; 25 percent are formally or informally considering purchasing them.

SG Cowen says Linux is increasingly pervasive: 44 percent of its respondents currently run Linux platforms, and 45 percent say they will emphasize Linux more in the future.

SG Cowen's data suggests Linux growth will be more at the expense of Unix than Windows, Chu said.

Web services seem to be as interesting to SG Cowen users as Linux. Today, 54 percent of respondents are using Web services, and 32 percent are evaluating for application integration or for new applications.

The level of adoption of Web services is surprisingly high, said Andrew Brosseau, managing director at SG Cowen. The numbers beg the question of how companies are using Web services, Brosseau said.

Meanwhile, interest in CRM software has cooled. SG Cowen found CRM is a strong candidate for becoming "shelfware" - meaning it sits purchased, but not deployed, at customer sites. The CRM market grew fast, and vendors were selling the software "at a pace much faster than the ability of customers to absorb and deploy those seats," said Rehan Syed, an SG Cowen managing director.

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