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Conclusion 03: 2001 Revisited
2001 was clearly one of the most parsimonious years ever for IT spending. The long-term legacy of 2001 is likely to be greater scrutiny of IT budgets, more attention to alignment, a move from stand-alone marketing systems to CRM, and a decline in knowledge management spending.
In last year's survey, two thirds of CIOs expected spending for 2001 would come in below budget. But such a drop occurred in just 42% of the companies that we surveyed.
Budget decreases aren't projected to be quite as frequent this year as they were last year. In 2001, 42% of CIOs say their budgets decreased from their original projections, against 35% projecting decreases this year.
When the budget ax swung in 2001, many high-visibility IT projects weren't immune: While 30% of companies that budgeted for CRM wound up raising their actual spending, 22% of companies budgeting for marketing automation software spent less than originally planned. At 37% of larger companies, knowledge management actual spending dropped below the 2001 budget. This year, CRM will continue to rise, at 36%, and knowledge management will be reduced further or eliminated at 29% of companies.
The recession led 66% of comPAnies to increase the scrutiny of their IT budget in 2001, and 62% to ensure that their IT spending is better aligned with business strategy. The push for alignment is consistent across large and small companies as well as companies that were increasing or decreasing their IT budgets, showing that alignment remains a universal concern among IT executives.