Report from the AMR Conference

Survey results show increase in IT investment, though environment remains cautious

LA JOLLA, CA  February 13, 2002  President and Chief Executive Officer Tony Friscia kicked off AMR Research's Strategy 21 Conference with a look ahead at spending projections for 2002. AMR Research's quarterly survey results for Q4 2001 show a planned increase in e-business budgets of 9 percent, up from 7 percent in the previous quarter.  The majority of overall e-business spending focused in areas that drive revenue, including sales and customer management initiatives.

"From an overall e-business perspective, the trend over the past three quarters indicates a still cautious IT investment environment. We are finding that budgets are already committed for 2002 and will continue to be allocated primarily on applications that leverage existing technology to increase the top line and enhance customer-facing relationships," said Friscia. "We view the coming year as a year of prioritization  forcing companies to look at the fundamentals that impact their bottom line, with incremental purchases on technology that demonstrate an ability to deliver a rapid ROI."

The percentage of companies that plan to increase spending continues to increase, from 60 percent in Q3 2001 to 66 percent in Q4. However, the percentage of companies planning to decrease spending more than doubled from 6 percent in Q2 2001 to 13 percent in Q4 2001, a continued reflection of the current state of the US economy and world affairs. Companies continue to assess the risks and rewards of any IT budget allocations by first defining key success metrics.

Other key findings from the AMR quarterly survey include:

  • Upward trend in consumer confidence and increased spending in the automotive, retail and housing markets signify possible early emergence from recession. However, the overall economy will grow more in line with mid-1990 levels, rather than 1999 levels.

  • Companies continue to invest IT dollars in the sell-side of their businesses, with a renewed interest in customer management initiatives in Q4 2001.

  • Headcount and training increased from 12 percent to 18 percent of overall e-business technology budget allocation, signaling that companies are spending more on the development of internal staff and less on outside consultants.

  • 72 percent of mid-market companies plan to increase spending on e-business, up from 54 percent in the previous quarter, signifying a significant opportunity for software vendors.

  • User success stories of technology will drive new spending late in 2002 as companies watch to see which emerging technologies have helped other companies achieve a competitive advantage.