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Senior Editor

Net execs hope to spend despite tight purse strings

Mar 10, 20034 mins
BudgetingData Center

Talk about a good news-bad news proposition: corporations are planning to spend money on oft-postponed network projects this year but they’ll only spend a little more than they did last year.

A recent study by Forrester Research reports overall IT spending will increase by about 2%, with one-third of the 877 surveyed companies planning to spend more in 2003 than 2002. The firm found that while infrastructure purchases took precedence in 2002, disaster recovery and business intelligence software applications will top the majority of companies’ shopping lists this year.

“IT execs are finding that they can only defer upgrades for so long. Many upgrades for 2001 were deferred into 2002 and then from 2002 to 2003. The issue has caught up with many IT organizations,” says Tom Pohlmann, senior analyst with Forrester.

Users seem to agree with the findings.

“Regardless of the economy, businesses will eventually have to move forward with IT projects because it’s going to reach the point where they won’t have a choice anymore,” says Basil Blume, CTO at Centennial Bank of the West in Fort Collins, Colo.

Blume spent the past two years replacing desktops and servers for the bank. This year he will request many maintenance projects, each with a small price tag – less than $10,000. While his IT budget is down about 20% (16% to 17% accounts for staff) from last year, Blume says he can’t see many companies holding off on technology investments for much longer.

“I came into the organization two years ago and explained, ‘It’s plumbing. You have to do these upgrades. Investing in IT is not always about ROI,’ ” Blume says.

Brian Jones agrees. He doesn’t expect the 15-year-old IBM Rolm 9751 PBX system at Virginia Polytechnic Institute and State University in Blacksburg to handle the load of e-learning, video-on-demand and voice-over-IP applications. “Our PBX is history; it’s out of maintenance. We have to buy pieces from old PBXs to keep it working,” says Jones, who is manager of network engineering and operations at the university.

But before it upgrades the phone system Jones says Virginia Tech will put its IT budget dollars (up 2% to 3% from last year) into new edge devices to enable Gigabit Ethernet to the desktop to support those bandwidth-hogging applications.

Rick Beebe, manager of systems and network engineering at the Yale University School of Medicine in New Haven, Conn., saw his 2002 budget drop 10% and has yet to hear the final word for potential spending in 2003 (the school’s fiscal year ends June 30). But he says he knows projects such as a networkwide switch upgrade will take priority over help desk and other customer-facing applications.

Also because his network supports the medical school, regulatory concerns, such as the Health Insurance Portability and Accountability Act (HIPAA), force Beebe to stay on top of security across wireless LANs. He recently started investing in wireless tracking, sniffing and auditing tools.

“Access points are too easy for users to install themselves, and they become a gaping portal to the inside of the network,” he says. “HIPAA is going to require us to close up those holes. Of course, it’s a good policy anyway, but HIPAA is a nice, big stick.”

Many enterprise network professionals in 2003 won’t need much incentive to take IT projects off the back burner and start moving forward in their technology adoption. Yet the Forrester report also found that despite continued cuts in IT positions – a separate study by Challenger, Gray and Christmas shows more than 270,000 technology jobs were cut in January and February of this year already – most companies do not plan to beef up staff to implement much-needed IT projects.

“For the most part, IT execs have put more dollars into the pent-up demand for technologies and will expect their staff to once again do more with less,” Forrester’s Pohlmann says.