NEW YORK - Regardless of the economy's apparent improvement, IT spending isn't likely to rebound just yet, financial experts here warned Monday.
"The probability of budget relief in the second half of this year is zero," said John McKinley, executive vice president and chief technology officer at New York-based Merrill Lynch & Co.
McKinley referred to this period as "the buyers' remorse era," when companies are questioning a lack of return on investment from high-priced items, such as supply chain and enterprise resource planning systems, bought in the past. Companies have also become over-reactionary after years of chasing an expanding world of online technologies.
"It's very popular to be anti-e," McKinley said. But those overly cautious attitudes will likely begin to ease later this year, he said.
Citing a recent survey of 74 U.S. and European CIOs, Steven Milunovich, technology strategist and enterprise hardware analyst at Merrill Lynch, listed underdeveloped technologies that are likely to see growth in the next few years. Topping the list are voice over IP, security, video conferencing and Linux.
Storage, customer relationship management and systems integration are likely to experience low-digit growth this year, said Milunovich.
"Frankly, I think even next year could be a little bit tepid," he said, adding that real technology market growth might not come about until 2004.
Security is at the top of most companies' priority lists, said Milunovich. But it's more a matter of establishing processes than of buying new products, so that interest might not translate into big spending.
The immediate future looks particularly grim for small vendors, said McKinley. After the Sept. 11 terrorist attacks, it was big vendors like IBM, Cisco Systems Inc. and EMC Corp. that had the resources to help Merrill Lynch recover. So having the most powerful chip or the best bargain are no longer the most critical factors when choosing vendors, he said.
Customer relationship management is still a priority, said McKinley, and Merrill Lynch is in the process of expanding its deployment of Siebel Systems Inc. products and adding new data mining tools.
"Guerilla wireless networks" and application service providers are also likely to experience big growth in the future, said McKinley. As for Merrill Lynch itself, once the economic recovery starts to pick up, it will likely start looking at systems integrators, he said.
David Weild, vice chairman of the Nasdaq Stock Market Inc., said his firm's technology spending plans are focused primarily on the SuperMontage electronic trading system that the stock market plans to launch this summer.
With most of the world's markets already operating electronically, Weild predicts a bright future for the notion of cross-border trading. "We will end up with globally integrated stock markets at some point in the next 10 years," he said.
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