[nukkad]

["Nelson Fernandes" <>]

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Global tech spend to remain subdued in second half of 2001


19:14 25 Sep


MUMBAI, Sep 24 - Even as the global community is recovering from the recent
terrorist attacks on the US, there is more bad news coming from the US for
Indian software companies.

In March 2001, 63 percent of US companies expected the economy to improve
sometime during 2001. However as of August, according to the survey of Chief
Information Officers conducted by US-based investment banker, Morgan Stanley
Dean Witter, only 8 percent of respondents expect the economy to improve
before the end of the year.


The percentage of CIOs who plan to spend more on technology in the second
half of fiscal 2001 than they did in the first half, decreased from 34
percent in July to 26 percent in August. "Those responding that they do not
plan on spending more in the second half increased from 54 percent in July
to 66 percent in August," said Charles Phillips, MSDW analyst in a recent
research note.


Also, the percentage of CIOs (225 respondents) reporting requests for cuts
from senior management, smaller deal sizes, or slowing/less spending,
decreased slightly from 48 percent in July to 47 percent in August. The
proportion of CIOs who have not changed their spending plans, but are
monitoring the situation closely, increased slightly to 53 percent in August
from 52 percent in July.


"The percentage of CIOs planning to spend less or spend more slowly in the
second half of the year, increased from 31 percent in July to 37 percent in
August," the analyst said. Moreover, 72 percent of the CIOs said that there
was no impact of the surprise interest rate cut by the Federal Reserve in
April.

"Apparently, most CIOs see no connection between their IT spending and what
the Fed is doing to interest rates," the survey said.


Areas most likely to see increased spending in the second half of 2001
include Microsoft Office upgrade for the desktop followed by e-commerce
initiatives and network equipment and security software. Microsoft Office
upgrade has moved up 2 spots from No. 3 in May to No.1 in August; it had
been No. 5, No. 8 and No.7 in February, March, and April respectively.


The slowdown in tech spending also seems to have forced both software and
hardware vendors to dole out better deals and more discounts to woo
customers. The percentage of customers who said that software vendors are
providing better deals or more discounts, increased from 36 percent in March
2001 to 61 percent in August, and that of hardware vendors increased from 62
percent in March 2001 to 82 percent in August 2001.


Interestingly, about 25 percent of the customers have reported that they had
overspent on technology during the last three years. Nevertheless, 44
percent of the customers feel that application suite that spans multiple
enterprise functions (accounting, human resources, CRM, SCM) is a viable
strategy to automate one's business.


Morgan Stanley' CIO survey is part of a series of monthly surveys that
tracks about 225 CIOs in US companies on their IT spending plans and
hardware and software preferences. The next survey is due for release in
October.






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