Tech exec rallying cry is cautious

Although many companies spent less on technology this year than originally budgeted, spending could increase modestly next year, according to a new survey from Morgan Stanley.

The 225 technology executives polled by the Wall Street firm projected that their tech budgets would grow,

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on average, by 5 percent in 2003. However, Morgan Stanley says it is projecting smaller growth of 2 percent or 3 percent, noting that many companies left open the possibility that they would have to lower their budgets during the year.

That's what happened this year. According to the survey, 58 percent of companies spent less than they planned in 2002, with 43 percent of companies actually lowering their tech budgets midyear. Still, two-thirds of executives felt their spending was at appropriate levels this year, with only a third saying that they were spending too little, compared with the needs of the business.

Nonetheless, there was some measure of optimism for 2003. Nearly half of executives were positive or slightly positive on the economic outlook, and another third of those surveyed were neutral. Only 21 percent were "negative" on the economy.

The outlook for investment is improving, with two in five executives expecting to spend more on new projects in 2003 than they did in 2002. However, companies will be taking a more measured approach.

"The IT (information technology) spending environment is still controlled and just in time," Morgan Stanley said in the summary of its findings. "No return to forward buying or bulk purchases appears in sight."

As for what companies will be spending on, security topped the list of software interests, while storage narrowly edged out PCs as the top hardware priority. Servers were also high on the hardware shopping list, with 37 percent of respondents eyeing big iron purchases.

Controlling costs remains the dominant issue on IT managers' minds, the survey found.

When asked which of four phrases best describe next year, 19 percent of those questioned called it "a year of new project investment"; 21 percent called it "a year of stabilization in spending after two years of belt tightening"; 16 percent called it "a year of IT cost reduction," while the largest number, 44 percent, called it "a year of IT cost containment."