Aberdeen Report: CIOs' Top Application Investment Priorities for 2002

Jan 31, 2002

Aberdeen Group

Investment Priorities for 2002
During the course of our inquiry into the top corporate investment initiatives for 2002, Aberdeen surveyed 151 technology executives across 14 industries. Though full results of the study are only made available to members of Aberdeen's Technology Forecasting Consortium (TFC), this report reviews the top 10 technology investment initiatives for the upcoming year, while providing additional perspectives regarding the probability that the intended investments will occur despite budgeting constraints.

Specifically, we asked TFC members to share their thoughts on where they planned to make technology investments over the next 6 to 12 months. A broad base of technologies displayed promising results. However, in general, infrastructure investment emerged as a consistent theme, suggesting that organizations are interested in doing more with "what they have" rather than pursuing significant enterprise-class application investments.

Topping the TFC's investment priority list are security and gateway services. Approximately 56% of the technology executives queried indicated that they would be making investments in this area during the coming year. This category includes items such as firewalls, "cyberwalls," content inspection, virtual private networks (VPNs), proxy services, and remote access systems.

The category of enterprise management also had a strong showing, with 53% of executives polled stating that they would be making investments in network, systems, or application management solutions in 2002.

Other technology infrastructure solutions such as application development tools, database management systems, backup and recovery software, application integration software, and security for Internet commerce demonstrated impressive results by exceeding the 40% threshold that Aberdeen uses to determine whether a significant percentage of respondents is considering an investment in a given technology.

In the category of enterprise applications, Customer Relationship Management (CRM) and Customer Service and Support (CSS) systems had the strongest showing, placing eighth on the list - with approximately 40% of technology executives surveyed indicating that they would purchase a CRM/CSS-class application in 2002.

Two other application subcategories - personal productivity (office automation software) and project management software - made strong showings, with 40.4% and 39.7% of executives polled, respectively, indicating that they would purchase applications in these two categories. While neither of these categories is traditionally considered "enterprise class," they were lumped into this category for the purposes of the survey.

Investment Priorities: Seriousness of Intent
Because projects that have been budgeted for can be shelved during lean times, an additional question was also included in our question set, one that aimed to provide insight into the seriousness of respondents' purchasing intent. Specifically, we asked TFC members claiming to buy a given technology solution over the next year to indicate the level of commitment to the project.

A scale of one to five is used to gauge the seriousness of purchasing intent. If a technology receives a low score, the technology category runs the risk of being shelved during the course of the year as cash becomes a concern or other projects displace it in a CIOs budgeting process. Conversely, if the technology is rated highly, the project is unlikely to be shelved or fall off the project list as the year progresses.

Clear winners in this category include security gateways and services, application development tools, backup and recovery software, security for Internet commerce, CRM/CSS-class systems, and database management software. Each of these subcategories had in excess of two-thirds of the executives who intend to purchase the applications scoring them as high or medium/high on the "confidence scale."

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Project management, personal productivity, enterprise management, and application integration software are examples of tech- nologies in our top 10 list that did not meet the two-thirds threshold. Therefore, more than one-third of the population indicating an intention to buy the software in the next 6 to 12 months has not rated the purchase as a high to medium/high purchasing priority. In turn, these projects are more susceptible to budget pressures than their counterparts that scored more favorably.

Aberdeen Conclusions
Aberdeen continues to assert the validity of our most likely economic outlook scenario for 2002, under which the domestic economy will begin to rebound in the first half of 2002 with lackluster GDP growth of approximately 1% to 2%, returning in Q2 2002, and yearly growth likely reaching marginally above 2%. Overall technology spending will regain momentum as well, trending upward between 5% and 7% for the year. This economic scenario represents a decline in growth ranging from 22% to 45% from recent historical norms. With this macro view in mind, Aberdeen finds that investment in technology infrastructure will precede the recovery in the applications market over the next 6 to 12 months.

- By David Wright, Wyeth Lynch, and James Tsai of Aberdeen Group, an IT research and consulting firm based in Boston.


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