Morgan Stanley: Looking Forward to 2003

Morgan Stanley has released its latest CIO survey today. At the highest level, Morgan Stanley finds prospects for economic recovery tamed a bit. Fifty-seven percent of respondents characterized their outlook on the U.S. economy as "positive" or "slightly positive," down from 66 percent in February. What else is new? For a start, approximately 65 percent of the 225 surveyed enterprises have started planning their budgets for 2003, offering a possible glimpse into the future. For e-business software and technology vendors, it's a future that could remain friendly to their wares. According to Morgan Stanley, 65 percent of enterprises plan to increase technology spending "moderately each year for the foreseeable future." Of that contingent, 28 percent say their spending will remain flat, while 5 percent say they need to ramp up their technology spending "significantly" in order to stay competitive. The remaining companies, a mere 2 percent, plan to reduce technology spending over the next few years. There could also be pent-up demand for e-business, as 56 percent of enterprises reported a "moderate" backlog of project requests from business units, while 28 percent said that the backlog was "significant." That said, Morgan Stanley noted that a full 35 percent of companies hadn't yet thought about 2003, "and even those that have probably have only taken a cursory look." E-business vendors looking to cash in on the ongoing appetite for technology spending should take note that 51 percent of prospects are scrutinizing the financials of vendors more carefully, while 47 percent claim to have always done so. Another important factor is that 60 percent of enterprises are consolidating the number of technology suppliers in their portfolio. The top three reasons for doing so are: leveraging volume discounts; reducing the complexity of dealing with too many vendors; and reducing the technical complexity of integrating products from several vendors. Vendors might be disappointed to learn that 52 percent of companies would "probably not" increase their spending on technology products over currently planned levels, even if their profit structure improved over the next three to six months. Another 10 percent added that they would "definitely not" increase over planned spending in those circumstances. Enterprises' top three e-business area priorities are security software, application integration, and a Windows/2000 XP upgrade for desktops. Number four, moving up ten places since Morgan Stanley's May survey, is data mining/OLAP tools. E-commerce initiatives come in at number six, enterprise resource planning (ERP) systems come in at nine, content management ranked tenth, and customer relationship management (CRM) ranked 11. What's at the bottom of the list? Procurement software came in at 48, partner relationship management (PRM) software was in a tie at 49 along with e-store software for websites, and at 51 (last) place was mainframe software. Demir Barlas also writes for Line56.com