Friday, July 12, 2002

Weather report for IT spending, 2002. Recent discussions with clients and vendors regarding IT spending trends in the current economic climate can be summarized in a few main points.
  1. “Tactical” wins over “strategic.” Companies are willing to make small incremental investments that have a clear, short-term payback. There is little immediate interest in making large bet-the-farm bets that may result in “strategic advantage.”

  2. for cost reduction are no slam dunk. In some industries, even initiatives that have a clear cost savings are being deferred simply because CFOs do not want to write a check.

  3. Compliance is king. IT investments involving regulatory compliance are more likely to be considered. Examples include HIPAA compliance, FDA regulatory compliance, and state-level compliance of financial service offerings. Privacy and security initiatives, even if not strictly mandated for compliance, are also high on the list.

In spite of depressed spending, there is not a general disenchantment with the role of IT in business. Companies have simply become much more realistic in their expectations for what is needed to make technology succeed and are biting off only as much as they can chew at one time. When spending levels do recover, the winners will be vendors that can deploy technology in smaller chunks and interface easily with legacy or third-party systems.

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