CIOs expect slow rise in IT spending

An authoritative survey of 100 chief information officers and IT directors by finance house Merrill Lynch has showed that users...

An authoritative survey of 100 chief information officers and IT directors by finance house Merrill Lynch has showed that users expect a gradual rather than quick improvement in IT spending in the months ahead.

The survey also found price was the most important factor in vendor selection.

The study, based on 75 US-based CIOs and 25 European IT executives, quoted one unnamed CIO as saying corporate executives will be more cautious about IT spending for the foreseeable future.

"Having cut costs and survived, we question how much of the spending was needed in the first place," the CIO said. "Business leaders are more knowledgeable of what the real benefits are that IT spending can provide and will be more conservative in spending."

The survey showed that two-thirds of the CIOs are investing in Web services; one-third use enterprise application integration software; two-thirds have application servers; and users are split between Java 2 Enterprise Edition (J2EE) and .net for their Web foundation.

It also found that 26% prefer J2EE, while 22% favour .net. A full 30% use neither while 7% use both.

Almost two-thirds of the CIOs surveyed by Merrill Lynch think that software will, in future, be delivered as a service, but said it may take another three to five years for that to occur.

Although most users said they were happy with their enterprise resource planning (ERP) and customer relationship management (CRM) installations, significant numbers said they have not gota satisfactory return on investment. About 60% had implemented ERP systems, and 25% were installing CRM.

One CIO said that many ERP installations "never provided the required return on investment, though you'll never read a press release to that effect." Disappointed users said the software was too pricey, full functionality was never realised, and integration with legacy systems was difficult.

The survey results also showed:

  • Users plan to add more full-time workers than consultants when demand improves


  • Demand for outsourcing is holding up better than systems integration and consulting


  • Europeans are outsourcing more often, but US CIOs by a wide margin are doing more internally as the use of consultants declines. More than half of users employ application service providers (ASP), led by IBM


  • Less than half of US CIOs cited cost of ownership (or operation) as their chief concern. But more than half of Europeans cited that as a top priority.

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