Conclusion 01

By CIOinsight  |  Posted 06-14-2002 Print Email

Conclusion 01: Spending Trends

The average IT budget for 2002 is increasing—up 9% over last year—but the rising tide is by no means lifting all boats. Most of the spending increase is at larger companies, and just a few of them at that, while budgets are dropping at smaller firms, which don't seem to have the strength to continue spending in the downturn. Meanwhile, hard-hit industries like financial services remain cautious. Still, the budget slide is expected to reverse in 2003.

Larger-company budgets rose from $49 million to $55 million, while budgets at smaller companies declined from $7.0 million to $6.4 million.

Nonfinancial service industries such as retail, entertainment and computer services saw budgets rise 27% over last year, though much of that is thanks to increases at a handful of very large companies. But IT budgets at nonprofits, including government, education and associations, are down 1.7% in 2002. Financial services budgets, the highest-spending category, remained essentially flat.

CIOs are not changing how they divide up spending between hardware, software, staff, services, training and maintenance. IT personnel remains by far the highest line item in the IT budget, at 38% of the budget in 2002.

IT execs expect a far rosier spending picture in 2003. Fully 62% of CIOs at smaller companies and 46% at larger firms believe overall spending will rise next year. Even in companies where IT budgets declined in 2002, only 34% think it will decrease again.


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