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By Anne Chen  |  Posted 2002-09-23 Print this article Print

: Web-Based Programs"> While IT spending forecasts vary widely depending on which organizations are releasing the results, analysts agree on which technologies IT executives will be betting in 2003. Web-based technologies such as portals and Web services development tools, for example, remain particularly strong. Half the companies polled by Meta are spending more on developing Web-based programs this year than they did last year, compared with just 18 percent spending less.

By contrast, 45 percent are spending less to develop computer applications that are not tied to the Internet, compared with just 14 percent that are spending more this year.

If IT budgets are relatively static and CIOs are increasing spending in some categories, they must be cutting spending in others. And, in fact, in the survey by Forrester, 39 percent of executives said they plan to take budget dollars away from outside consultants. In addition, 38 percent said they expect to move dollars from another IT budget category into application development and software licenses.

The zero-sum nature of IT budgets these days means that some CIOs are attempting to take a more scientific approach to managing what theyve got. Many are turning to portfolio asset management, a technique borrowed from financial analysts who use it to balance risk and reward across a wide range of investments. At Cap Gemini Ernst & Young U.S. LLC, John Parkinson, chief technology officer of the consultancy, said his New York-based company is not only aggressively using the approach in-house but is recommending that its clients do so as well.

Cap Gemini Ernst & Young is also using cost analysis and budgeting systems to keep an eye on and hold down costs.

"Were seeing more interest among our clients in doing asset management and budgeting," Parkinson said. "Many organizations roughly know what they spend money on and which machines are leased but have not really done aggressive analyses. Tight IT budgets are forcing them to see that they need to have effective budgeting and analysis systems in place."

Tighter IT budgets, however, are not keeping organizations from finishing the large enterprise projects they already have in the works, even if that means shrinking investments in other areas. At EMI Industries Inc., in Tampa, Fla., Dave Hahmann, vice president, said most of his companys 2003 IT budget will be spent on finishing off an implementation of Siebel Systems Inc.s Siebel 7.04 MidMarket Edition CRM package that began in April and went live in June.

EMI, a $25 million manufacturer of food retailing equipment, allots less than 5 percent of its budget to IT. Hahmann said the companys budget for next year will increase slightly—mainly to allow him to finish his CRM implementation. Otherwise, spending will be limited to upgrading software and purchasing servers. Hahmann, who would like to replace his current ERP package with a Web-based ERP system capable of handling bar-code-scanning and shop-floor-control functions, said any such large decisions and purchases will be placed on the back burner until 2004.

In the meantime, to hold costs down, EMI has outsourced the deployment of its Siebel CRM suite to Surebridge Inc., in Lexington, Mass. While all servers are currently managed in-house at EMI, Hahmann said tighter restrictions on IT spending have him considering moving his entire IT infrastructure to an application service provider model hosted by Surebridge. The business benefits: reduced operating costs and new, better services for EMIs customers and internal users.

As a senior writer for eWEEK Labs, Anne writes articles pertaining to IT professionals and the best practices for technology implementation. Anne covers the deployment issues and the business drivers related to technologies including databases, wireless, security and network operating systems. Anne joined eWeek in 1999 as a writer for eWeek's eBiz Strategies section before moving over to Labs in 2001. Prior to eWeek, she covered business and technology at the San Jose Mercury News and at the Contra Costa Times.

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