Time to Spend

By Larry Barrett  |  Posted 2002-07-02 Print this article Print

Expenditures of public companies are getting closer scrutiny. When will there be accounting for information technology?


Time to Spend?

And despite the dramatic slowdown in technology spending in the past year, 50% of all capital spending by U.S. companies was information system-related, according to Bill McNee, managing partner at the business strategy consultant firm Saugatuck Technology.

"Companies are still holding IT spending tight," McNee says. "But we're approaching the end of the ability to postpone."

When that dam does finally break and technology spending rises, there will be more scrutiny on where and how the money was spent. A Saugatuck survey indicates U.S. CIOs have under-spent their budgets by between 10% and 20% this year. In April, a Morgan Stanley survey showed that while 80% of U.S. companies planned to begin new application initiatives, only 23% of those projects were started in the first quarter.

With the economy still ailing, pressure is also on to avoid the "soft costs" that tend to creep into any major installation—such as lost sales or wasted labor from unpredicted downtime.

"Generally, companies don't want to publicize these IT costs because it makes them look bad," says Cameron Steele, an analyst at the RBC Dain Rauscher brokerage. "There's not much to gain by talking about it. The damage has already been done."

Senior Writer
Larry, of San Carlos, Calif., was a senior writer and editor at CNet, writing analysis, breaking news and opinion stories. He was technology reporter at the San Jose Business Journal from 1996-1997. He graduated with a B.A. from San Jose State University where he was also executive editor of the daily student newspaper.

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