Corporate IT spending will rise moderately in 2001

The results of a survey of 150 top CIOs show that corporate IT budgets are expected to increase at a more modest rate next year than they did this year.

          The results of a survey of 150 top CIOs, released today by Morgan Stanley Dean Witter, show that corporate IT budgets are expected to increase at a more modest rate next year than they did this year.

          The CIOs who took part in the survey said their companies plan to increase IT spending by an average of just 8% next year, according to New York-based Morgan Stanley. That compares with an average budget increase of 12% this year, the company added. And 16% of the respondents said their IT investments will decrease year-to-year in 2001.

          The smaller increase in planned spending "isn't surprising given the uncertainty in the economy, financial markets, corporate earnings and political environment at the time of the survey," said Charles Phillips Jr., a technology analyst at Morgan Stanley. In particular, he added, economic concerns have left many corporate leaders wary of overspending on IT.

          Phillips also said technology spending was "front-end loaded in 2000" because of the resumption of projects that had been put on hold during Y2k remediation efforts and the frenzy of e-commerce activity that took place before concerns about the viability of many dot-com ventures dampened the enthusiasm for such ventures.

          The telephone survey of CIOs at 150 Fortune 1,000 companies, including the likes of Bristol-Myers Squibb Co., Colgate-Palmolive Co. and Staples Inc., is part of a series of such surveys that Morgan Stanley undertakes on a quarterly basis. The results were released at a CIO Outlook 2001 conference that the financial services firm is running this week.

          The CIOs who took part said their companies increased spending this year in four major technology areas: databases, online marketplace software, e-commerce and networking equipment. Next year, according to Morgan Stanley, additional spending will again be targeted at e-commerce projects, with supply chain applications and application server software also expected to be priorities for many companies.

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