Chief information officers surveyed by CIO magazine say their spending plans are starting to pick up, according to the June results of CIO's monthly Tech Poll.
Respondents predicted their IT budgets will grow by an average of 5.6% over the next 12 months, up from the 3.3% average projected in May.
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% reporting plans to increase spending but 27.1% saying they will decrease spending. Telecom equipment also attracted low interest, with 28.9% planning spending increases and 22.5% planning reductions.
CIO magazine's survey panel includes 5000 executives, primarily CIOs. In June, 94% of the survey's several hundred respondents were from North America, with large enterprises representing 20% of the results. Respondents work in a wide assortment of industries, including manufacturing, finance, government, health care and technology services.
Projections on when IT spending will significantly turn around were hazy, with the plurality of respondents, 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.
Still, when asked to compare their expected IT spending against the previous quarter's, 7.1% of respondents said their spending would be "significantly higher," the strongest response received for that question so far this year. Twenty-five percent said spending would be "higher." The group of respondents anticipating "lower" or "significantly lower" spending dropped to 15.8%, the lowest result in that category this year.
Prudential Securities chief investment strategic Ed Yardeni, one of the poll's creators, largely attributes projected spending increases to a new US tax plan allowing small businesses to write off $US100,000 in capital equipment investments. That change has motivated businesses that had previously frozen their tech spending, he says.
Respondents cited weak profits as the top obstacle to spending growth. Other factors mentioned include tight financial conditions and the sufficiency of existing capacity.