By Amy Higgins
The Cincinnati Enquirer
Companies must upgrade their computer systems - eventually. And while it won't be a 1990s-style tech-buying frenzy, many analysts are predicting a modest tech rebound to come in 2003, a sorely needed boost for a still-wheezing U.S. economy.
"Last year, there were a lot of cutbacks," said Bruce Tempkin, principal analyst at Forrester Research in Boston. "A healthy tech sector helps to bolster the overall economy."
Indeed, Mr. Tempkin recently predicted a 5.6 percent rise in spending on technology in 2003. With information technology spending making up almost half of companies' capital expenditures, increased tech spending logically translates into higher business spending.
And that would mean a definitive end to a recession caused by a sharp drop in business spending in 2000 and 2001.
Next year's tech spending increase will remain far under the levels of the whiz-bang late 1990s, however, because only about one-quarter of U.S. companies will actually add more dollars to their IT budgets, Mr. Tempkin said.
Most - like Cincinnati Bell - will keep their spending level while trying to keep up with fast-paced upgrades and replace the last generation of systems they bought in the1990s.
"There are a lot of opportunities out there to do more with less," Mr. Tempkin said. "With the same money this year, you can do a lot better than you could in previous years."
Rod Robinson, head of purchasing at Cincinnati Bell, said the local telephone company will upgrade many of its systems more efficiently in 2003 by better forecasting its needs and through competitive bidding.
Mr. Robinson said Cincinnati Bell expects to spend about the same amount on technology upgrades in 2003 as it did on 2002 - but getting more bang for its buck.
"When times are tough, companies look for ways to cut costs but not at the expense of being able to grow the business," Mr. Robinson said. "We want to be more efficient."
Another creative solution that Thomson Learning in Mason has discovered is the pricing leverage of bulk buying. Brian McDaniel, senior procurement specialist with Thomson, said the textbook publishing company has formed a tech-spending council, pulling different divisions together across the country to buy their computers and software upgrades in bulk.
But the textbook publishing company still is planning for some major upgrades, especially in its growing Mason offices. It will just make smarter purchases.
"We're looking to spend about 6 percent less than we spent in the past," Mr. McDaniel said. "We're looking at how to better spend the dollars we are spending."
E-mail ahiggins@enquirer.com
