Modest Recovery Continues

The latest Morgan stanley CIO Survey predicts "gradual and modest" economic improvement during 2002 but warns that past overbuying will ensure lower IT spending for the foreseeable future. As the report puts it, "CIOs are less fixated on the slowing economy but that doesn't mean they see urgency to spend." However, according to Morgan stanley, a number of e-business application areas remain hot -- with the top three being security, connecting to customers via the Internet, and application integration. Enterprise resource planning (ERP) came in at number five, with customer relationship management (CRM) being number eight. Dead last, at number nineteen, was procurement software. As usual, Windows 2000 upgrades were high on the list, with desktop upgrades at number 4 and server upgrades at number 6. While priorities are well and good, what have enterprises actually bought so far this year? Forty-seven percent haven't purchased a major enterprise application at all, says the survey; thirty-two percent have bought a financial application; twenty-seven have bought an HR application; fifteen percent have bought a supply chain management (SCM) application; and only nine percent have bought a CRM application. The emphasis on ERP-type applications like financials and HR could be one reason ERP moved up from number to ten to number five on the priority ladder. Morgan stanley's March 2002 data is reason for cautious optimism given the dire situation in IT spending that prevailed late last year. In November 2001, 66 percent of CIOs said that the state of the economy had caused them to reevaluate their IT budgets; that figure shrank to 41 percent is February and is now at 34 percent.