CIO Plans for 2003

CIOs Are Bumping CRM to the Backseat and Looking to Linux for Long-Term Success

If companies have learned anything in the past year on Wall Street, it's to consider the value of long-term investments that promise slow but steady payoffs. The results of the "Morgan Stanley Dean Witter CIO Survey Series: Release 3.5" show that organizations are hedging away from implementing new CRM technology because of its uncertain profitability.

Twenty percent of the 225 CIOs surveyed indicated that they aren't confident about the return investment for CRM technology, and another 20 percent said CRM is "useful, but not a high priority at the moment."

The top five priorities for IT are: security software, application integration, Windows 2000/XP upgrades (desktop), data mining/OLAP tools, and Windows 2000 upgrades (server). At the number four spot, data mining and OLAP tools are receiving noticeably more attention than in prior surveys, jumping up 10 places in only one month.

CRM, on the other hand, isn't meeting all its expectations. Research and surveys by Gartner Group and Merrill Lynch show that 45 percent of CIOs at large companies aren't satisfied with their CRM systems, and more than 50 percent of CRM projects don't meet expected financial and tactical goals.

Michael Maoz, Gartner analyst, said, "The problem is that the targets that are set often aren't quantified by numbers." Or, companies buy CRM software trusting that it will show immediate and measurable results, but it fails to do so.

CRM sells like a product that, once installed, will offer financial solutions, when really it's an integrated business strategy. "The biggest mistake is that companies don't spend a lot of time or energy on the data. Without the data the apps may be great, but they don't work," said Yankee Group analyst Sheryl Kingston. But now that OLAP tools and data mining are strengths, many CRM weaknesses can be targeted and restructured at the roots.

The Morgan Stanley Dean Witter report shows another notable change in CIO budgets — an increase in new Linux owners and companies considering switching to Linux. Twenty-nine percent of organizations said they already own Linux servers, and for new Linux converts, 31 percent are adding capacity, 31 percent are replacing Windows, and 24 percent are replacing Unix.

An upturn in both Linux integration and data mining further suggests that CIOs are changing how they manage their IT budgets, not just what they spend on. Ten percent of the respondents said they plan to spend more slowly on IT, "more in the second half of the year once they have a better read on things," up four percent from a previous survey.

The report offered this view of the industry and its spending forecast: "We believe the worst is over, as 2002 should be a year of gradual and modest improvement, with further improvement in 2003; but overall tech spending should lag the pace of the recovery because of the lingering effects of overbuying in the past."

— Jill Duffy

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