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BANGALORE, Feb. 3

CHIEF information officers (CIOs) may be starting the year on a cautious note, but over 60 per cent of them reported budgeting for security software, according to the CIO-Yardeni Tech Poll.

Weak profits and `tight financial conditions' remain the major obstacles for spending on information technology, with the projected 12-month growth rate and the percentage of CIOs planning to increase spending in seven categories of IT declining in January.

About 7.4 per cent of the respondents claim their IT spending will increase in the first quarter of 2002, while nearly 50 per cent predict spending will increase during or beyond the second quarter.

``The latest poll suggests the 2002 recovery for IT spending will be challenging. However, there are already some signs of improvement,'' according to Dr Edward Yardeni, Chief Investment Strategist of Deutsche Banc Alex Brown.

Security software top priority: Almost 60 per cent of the poll's respondents expect to increase spending on security software. ``Securing IT infrastructures continues to be a major initiative for the CIOs,'' said Mr Gary Beach, group publisher, CIO magazine.

In terms of spending priority on security software, 42.2 per cent of the respondents reported setting administration, authorisation and authentication software as the number one priority, while firewall and anti-virus software were selected by 18.3 per cent and 12.2 per cent of the respondents respectively.

Outsourced IT spending down: Outsourced IT spending plans deteriorated markedly in January after improving for two consecutive months, and remains the weakest sector in the survey.

Among the respondents, only 24.2 per cent expect to increase spending compared to 33.5 per cent in December, and 37.1 per cent actually plan to cut spending, up from 27 per cent a month ago.

Storage systems showed the greatest improvement in January, and emerged as the strongest sector — the per cent of respondents expecting to increase spending in this sector increased to 48.3 per cent from 41.6 per cent in the previous month.

At the same time, the bad news for the telecom equipment industry eased a bit with the percentage of respondents expecting to decrease spending falling to 24.1 per cent in January from 27.8 per cent in December.

Internet prospects better: The CIO-Yardeni poll reports that 14.3 per cent of IT budgets will be spent on developing business over the Internet (B2B and B2C) in the next 12 months. This is up slightly from 13.3 per cent reported for the previous 12 months.

On the other hand, 35.3 per cent of the respondents plan to increase spending on e-business software in the next 12 months. Further, nearly 11 per cent of revenues could be generated from the Internet, according to respondents, compared to 8 per cent in the last 12 months.

Those polled included over 2,000 CIOs and 3,000 people matching the CIO job function, with 95 per cent of the responses from North America.

A broad cross-section of industries is represented, including manufacturing (19 per cent), finance (11 per cent), technology services (14 per cent), healthcare (10 per cent), and distribution (5 per cent).

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