The State of IT Spending in 2001

I RECENTLY MODERATED a panel of six CIOs who spoke before an audience comprising vendor salespeople. During the question and answer session, one of the salespeople asked what consequences the market slowdown would have on the CIOs’ IT budgets.

The consensus: In the days of preparing for Y2K and fending off dotcom startups, CIOs had open checkbooks. Now, more scrutiny is taking place.

I thought of that session when I read a report on IT spending trends in corporate America from Stamford, Conn.-based Meta Group. While generally in line with my panel’s observations, Meta Group offered a new twist that we tend to overlook.

Information technology has moved from enabling a company to conduct its business to actually being the business. As such, the budgets of many CIOs have grown substantially in the past five years. CIO research claims the average reader of this magazine works for a company that has an $85 million IT budget.

OK, get over it. So you didn’t get the spending increase you wanted this year. Or maybe your budget was cut a few percentage points to $83 million. The point is you still have a lot of money to spend. And according to Meta Group, you’d better spend it wisely because everyone is watching. As you plan your 2002 budget, Meta recommends you segment it into five areas: core/operational expenses (stuff you have to do to keep the lights on and staff paid), nondiscretionary expenses (projects you have to do to remain competitive in your market sector), discretionary enhancements (upgrades or replacements to existing services), investments (new, proactive projects that will give you a competitive advantage) and ventures (experimentation projects such as equipping the sales force with wireless devices).

In preparing 2002 budgets, Meta concludes that CIOs need to articulate their plans in clear, concise business terms more than ever before. The checkbooks are still open. You are just going to have to work harder to get your approvals.