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FRAMINGHAM, Mass., -- November's CIO Magazine Tech Poll shows, "The majority of CIO panelists believe we will see a pick-up in IT spending before or by the end of 2003. These results give us some hope the worst of the IT spending slump may be behind us by the second half of 2003," says George Elling, Managing Director, Enterprise and PC Hardware Research for Deutsche Bank Securities. IT spending has shown some very modest declines over the past four months compared to a year ago. Increasingly, CIOs are saying weak corporate profits are holding back their IT spending as evidenced by the CIO Magazine Tech Poll," continues Dr. Ed Yardeni, Chief Investment Strategist for Prudential Securities Inc. "Despite weak profits and declines in spending, CIOs are more optimistic about IT spending because of replacement needs, such as computer hardware, security and infrastructure software. The question remains whether this will be the catalyst for renewed IT spending," adds Gary Beach, Group Publisher of CIO magazine. The CIO Magazine Tech Poll provides technology and business executives, economists, and policymakers with a tool to gauge technology growth trends and to assess their impact on the overall economy. The poll panelists are asked to answer questions on overall current and projected IT budgets on a monthly basis. Also covered are future spending plans for IT hardware, software, services, and Internet initiatives. The results of November's poll, conducted from November 7-14, are detailed below. CIO Magazine Technology Growth Indicators The CIO Magazine Tech Poll results are used to construct the CIO Magazine Tech Future Growth Index (TFGI) which projects IT activity over the next 12- months. In November, the TFGI was 1.8, compared to 1.5 in October. Table 1 providing historical data and selected charts can be found at http://www.cio.com/info/releases/120202_techpoll.html. Overall IT Budget and Costs During November 2002, the CIO Magazine Tech Poll panel projected IT budgets to grow by 5.1% over the next 12 months, up modestly from October (4.4%). In addition, the panel reports IT budgets declined by an average of 0.5% over the previous 12 months, a slight increase from the 1.5% decline reported in the October poll. IT Sectors When asked about spending in eight specific IT categories, the average number of panelists planning to increase spending was up slightly from the previous month at 38.2% (versus 36.7% in October), while those planning to decrease spending increased slightly to 22.0% (from 20.4% in October)(3). Security software continues to be the strongest sector in the poll with roughly 56% of respondents planning to increase spending (an increase from 52% in October) while only 6.4% plan to decrease spending (versus roughly 6.6% in October). Computer Hardware. The outlook for Computer Hardware spending improved modestly month-to-month. Among the panelists, 39.3% plan to spend more compared to 38.3% in October, with 27.7% planning to cut spending, versus 23.4% in October. Infrastructure Software. The percentage of CIOs planning to increase spending on infrastructure software was 32.6% in November, down from 33.1% in October. Those planning to decrease spending rose from 17.8% in October to 21.6% in November. Compensation Costs and Labor Market Conditions. IT compensation costs (including salaries, benefits, and bonuses excluding stock options) reportedly rose by an average of 2.4% in the 12 months ending in November, essentially flat with October, but down from 3.8% a year ago. Five percent (5.0%) of respondents report IT professionals were hard to find and retain, down significantly from last month (7.3%), and down from 9.3% a year ago. Internet Budgets and Business Internet Budget Plans. CIO Magazine Tech Poll panelists report they expect to spend 13.4% of their IT budgets on developing business over the Internet (B2B2C) during the next 12 months. This is slightly above the 11.8% reported spent over the previous 12 months. Internet Revenues. Overall, panelists expect to generate 11% of their revenues from Internet activity (B2B2C) over the next 12 months, compared to 8.5% during the previous 12 months. This is slightly above last month's levels of 10% and 7.2%, respectively. Internet Purchases. On average, during the next 12 months, panelists expect to purchase 19.3% of their materials, supplies and parts over the Internet, up from an estimated 15.7% over the past 12 months. Special Questions Prior and Current Quarter Comparison. When asked to compare expected IT spending during the fourth quarter of 2002 to the third quarter of 2002, 24.6% say spending in the current quarter would be higher or significantly higher (slightly higher than October's 23.4% expectation), while 29.6% say it would be lower or significantly lower (roughly flat with 29.4% in October). The remaining 45% have not changed spending plans (a decline from the expected 47% in October). Table 2 presents the results of the special questions, http://www.cio.com/info/releases/110102_techpoll.html. Pickup in IT Spending. Among panelists, 27.2% report IT spending either never slowed or has already picked up (slightly higher month-to-month), with 11.3% claiming to have already seen a spending pickup (vs. 8.6% in October). In addition, only 3.3% expect to see a pickup in 4Q02, while 26% expect to see a pickup in 1H03 (first half 2003) and 21% expect to see a pickup in 2H03. Further, an additional 15% expect to see a pickup beyond 2003. Spending Factors. Weak profits continue to have an adverse impact on tech spending. This was cited by 41.2% of the panelists as the primary factor affecting IT spending plans in 2002. Another 28% see "tight financial conditions" as the primary factor adversely affecting IT spending plans, and 24.6% said that spending might be weak because there is sufficient IT capacity. Operating System in 5 Years. When asked which operating system is expected to dominate high end corporate computing infrastructures in 5 years, panelists were somewhat evenly split between Windows and Linux/Unix platforms. Thirty-eight point two percent (38.2%) of panelists believe Windows will dominate in 5 years, while 42.9% expect a Unix/Linux platform to be prevalent. Within Unix/Linux, 22.3% expect Unix and 20.6% forecast Linux to dominate. Three percent (3.0%) expect some other platform to lead, while 15.9% were unsure.