A resurgence in local technology spending is not likely to happen until well into next year, as lingering economic uncertainty makes large firms move more cautiously, according to a survey of corporate chief information officers.
"Over the last two years we've definitely been in a drought," said Chuck Phillips, a managing director at Morgan Stanley, the investment bank that conducted the survey. "Companies are hopeful about a stabilization, but they've said that before and it has not panned out, so they're still cautious on their outlook for technology spending."
More than half of the 225 chief information officers surveyed said that 2003 will be a year of controlling or reducing technology costs. Only 19 percent said that they expect to spend money on new projects next year. The survey, most recently taken in October and November, is conducted 10 times a year to keep tabs on the industry. Participating companies have annual revenue of more than $1 billion.
Levels of corporate information technology spending also will be fluid, the survey found. Forty-three percent of companies interviewed said their 2002 spending budgets were cut throughout the year, a trend expected to continue into 2003.
"Companies will have a budget in place, but it is something that can be revisited on a monthly or quarterly basis," Phillips said. "If their business isn't doing well, IT spending is something they will push back or delay."
Views on the broader economy remain mixed, with the number of executives with a positive outlook climbing to 44 percent, but the number of those with a negative outlook also rose -- to 21 percent. But nearly 70 percent of those surveyed had a positive outlook on their own businesses' prospects.
A slow economic recovery continues to weigh on technology spending, however, and a growing number of executives do not expect the economy to improve until later in 2003, or 2004.
"Their companies are not going to spend more on technology if their business is bad," Phillips said. "We think that technology will lag a general economic recovery."