CIO survey shows slight rise in spend

Chief information officers have predicted that their IT budgets will grow by around 5.6% over the next year, up from the 3.3%...

Chief information officers have predicted that their IT budgets will grow by around 5.6% over the next year, up from the 3.3% projected in May.

The CIOs, who were surveyed by CIO magazine's Tech Poll last month, said their spending plans were starting to pick up, according to the June results of CIO's monthly Tech Poll.

Security software remained the strongest of the eight IT sectors covered by the poll, with 54.4% of respondents planning to increase spending.

Outsourced IT services was the weakest area, with 27.7% saying they would increase spending but 27.1% decreasing the amount they spent.

Telecom equipment also attracted low interest, with 28.9% increasing their spend and 22.5% planning reductions.

The survey panel includes 5,000 executives, primarily CIOs. In June, 94% were from North America, with large enterprises representing 20% of the results. Respondents work in a wide assortment of industries, including manufacturing, finance, government, healthcare and technology services.

Projections on when IT spending will significantly turn around were hazy, with 30.3% opting for "beyond 2003".

Eighteen percent said it has already picked up, while 26.1% forecast an industry-wide pickup for sometime in the last half of 2003.

When asked to compare their expected IT spending against that of the previous quarter, 7.1% said their spending would be "significantly higher", the strongest response received for that question so far this year. Meanwhile, a quarter said spending would be "higher".

The group of respondents anticipating "lower" or "significantly lower" spending dropped to 15.8%.

The optimism has been attributed to projected spending increases as a result of a new US tax plan which allows small businesses to write off $100,000 in capital equipment investments. That change has motivated businesses that had previously frozen their tech spending, he said.

Respondents cited weak profits as the top obstacle to spending growth. Other factors mentioned included tight financial conditions and the sufficiency of existing capacity.

Stacy Cowley writes for IDG News Service

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