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Tech Spending Roars Back: Morgan Stanley

A new CIO survey signals a recovery in IT spending and a possible end to the era of cost cutting.

NEW YORK (TheStreet) -- The slump is over, says Morgan Stanley (MS) - Get Morgan Stanley Report. Tech spending is on the upswing according to its latest CIO survey.

After falling 1.8% last year, spending on technology is set to grow about 3.2% in 2010, at least according to the responses of 150 tech chiefs surveyed last month by Morgan Stanley. The survey results, issued in a report Thursday, also show that CIOs were slightly more inclined to spend than they were according to a January survey.

The conclusion from the survey suggests a recovery or a return to more normal spending patterns. By contrast, the takeaway from the same survey a year ago was "

optimizing resources


Morgan Stanley cautiously sums it up as a dramatic shift in confidence.

"While we would still categorize the pace and timing of the rebound as somewhat fragile, the most important data point we highlight is the apparent start of a transition in the buyers' mindset from a defensive, cost-cutting mentality, to one that is more focused on growth and expansion," the analysts said in the note.

The survey is an attempt to gauge how big businesses are planning their tech expenses for the year.

Here's where the money is going: hardware and software. More specifically in hardware, orders are predicted to be picking up at storage equipment outfits like



, virtualization systems from


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and switches from shops like


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In software, it appears that the usual suspects will be raking in the proceeds from a revived spending cycle. Enterprise software giants like


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, as well as


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, came up big in the survey.

All this is very interesting, but as jaded observers would note, tech buyers put together their wish lists every year. And for the past two years, those dreams were dashed, suppliers were left hanging and investors were disappointed.

Though 3.2% spending growth seems reasonably modest, it would be a dramatic improvement over prior years if it pans out. If not, it could be yet another set up for disappointment.

--Written by Scott Moritz in New York.