"IT budgets are being scrutinized more carefully, infrastructure investments are now tougher to justify and fewer initiatives are being given the green light," said Ellen Pearlman, editor-in-chief of CIO Insight magazine. "Top executives are asking CIOs to generate more benefits from previous investments and focus on projects that can produce an immediate payback -- preferably through cost reduction."

Although IT departments expect to begin fewer projects this year, CIOs are still willing to spend. Categories which they say could see the largest increase in corporate IT investment include: open source (e.g. Linux), wireless networking/mobility (e.g.WiFi, wireless PDAs), and packaged e-business applications (e.g. CRM).

Infrastructure investment, one of the toughest areas to justify -- could be hardest hit -- reflecting the fact that CIOs are focusing their attention on getting the most value from their current systems. Among the biggest decliners for 2003 include: networking hardware/ infrastructure (e.g. routers, switches), databases & applications development tools (e.g. Oracle), and communications hardware/ infrastructure (e.g.Voice over IP).

Overall, growth in IT spending will decline 0.2 percent in 2003, primarily because large companies are anticipating a contraction in both capital expenditures and operating expenses, the survey found.

CIO Insight conducted the 2003 IT spending survey in collaboration with Advantage Business Research Inc., a New York based supplier of custom research services. CIO Insight polled 300 CIOs or equivalent titles from October 15 to October 29, 2002.  All qualified respondents described themselves as knowledgeable or very knowledgeable about their company's IT budget.