(FORTUNE Magazine) – The disaster known as your corporate computer system got its start many years ago. Back when bewildered executives first encountered personal computers, they scarcely tried to control these strange new critters. Instead of centralizing and monitoring the buying of PCs and software--as they routinely did with everything from staplers to the company mainframe--many companies let employees bring in whatever equipment tickled their fancies. "It got out of control," says Christopher Germann of the Gartner Group, a Stamford, Connecticut, research firm, "with people buying technology using petty cash and credit cards while different business units bought multiple platforms from multiple vendors."

You know the result. Employees curse counterintuitive software and malfunctioning networks, scoffing at the idea that all this stuff inevitably improves productivity. Meanwhile, costs rise, then rise some more. Nobody wants to fall behind in this race, so companies upgrade ceaselessly, buying the newest, fastest PC, the latest version of Microsoft Office. And then there is the most insidious cost of all: maintenance. Trying to get it right means spending millions on service and support.

But there's a change at hand. After all these years of getting mad, companies are finally getting even. Corporate purchasers of information technology are displaying a new judiciousness--and this time they swear it's not just for a quarter, not just for a year, but for good.

Sales of PCs to businesses have declined every month since November 1995, says Computer Intelligence, a research firm in La Jolla, California, and that's a record. The worst month in the streak was last December, when sales dipped a harsh 18.5% vs. December 1994. In this year's second quarter, sales were down 6.3% from the same period last year.

Hardware manufacturers aren't the only companies stunned by customers who've had it up to here. According to Computer Intelligence analyst Matt Sargent, Microsoft is suffering from what he calls the "unacceptance of Windows 95" in the workplace. Sure, many may move to the company's network operating system, Windows NT, in the near future. But according to IDC, a Mountain View, California, research company, 18.5 million people in businesses, schools, and government use Windows 95--leaving about 73 million of those types staring at vintage Windows 3.1 on their PC screens.

Mind you, corporations aren't actually spending less on information technology. Corporate budgets are up more than 5% in 1996. But companies are spending those dollars in new ways--building intranets, increasing training. They're trying to break the relentless hardware and software upgrade cycle that has enslaved them to Intel and Microsoft, and they're reconsidering their commitment to pricey and unreliable client-server networks.

Corporations may be less profligate than in the past, but few are willing to talk on the record about their newfound discipline. Having cutting-edge information technology is cool--saying that you don't need it is not. "No one's going to dump on you if you haven't got the coolest copiers," says John Holland, online strategist for CKS Group, a multimedia marketing firm. One executive who took rather extreme measures to scotch his company's six-figure upgrade plan wouldn't even let FORTUNE tell his story anonymously.

The companies that will talk feel burned. But they also think they've finally turned the corner on this problem. Their message to the computer industry: Don't count on us to be the passive customers of yore.

"We probably had one of every system that had ever been made. And our PCs were attached to servers, LANs, mainframes, and everything in between." --Fred Craig, director of desktop computing for General Motors

Most corporate networks are mishmashes that are onerous to manage, support, and upgrade. Taking control of that mess is no easy task. For starters, many businesses don't even know how many computers they own. One manufacturing company that purchased inventory software as a first step toward cataloguing its technological assets saved $150,000 the first month alone--the company discovered that accounts payable was still writing checks for maintenance agreements supporting software that had been discarded long ago.

As few as 5% of U.S. firms have complete inventories of their hardware and software. One of these is General Motors--maybe the last company you'd think could get a handle on the assets of its thousands of departments. In 1993, GM had 27 E-mail systems, ten word-processing programs, five spreadsheet applications, and seven business graphics packages. That's when the company figured enough was enough. GM decided to standardize its configurations and freeze PC spending at 1993 levels.

Three years later every GM employee who uses a PC works on a standard configuration: Microsoft Windows 3.1, Microsoft Office, and Lotus Notes running on high-end Compaq PCs supported by IBM servers and Hewlett-Packard printers. The company donated most of its old PCs and software to charities. Now no software outside the standard configuration gets into a PC without special approval. "Employees cannot bring software from home, and they can't download it from the Internet," says GM's Fred Craig, who claims these policies have kept the vast network virtually virus-free. Better yet, they've helped GM attain its cost-control goals: The automaker spent no more on its desktop PCs last year than it did in 1993.

"When Windows 95 was rolled out, you saw a lot of people pull their heads in." --Michael Koss, CEO of Koss, the Milwaukee stereo headphone and computer speaker manufacturer

Loyal as General Motors is to Microsoft, even GM won't be joining the ranks of Windows 95 users anytime soon. The automaker doesn't plan to upgrade its standard configuration until the second half of 1997, when the company may move to Microsoft's network operating system, Windows NT.

"There has definitely been a huge backlash against Windows 95 in the business market," says Sargent of Computer Intelligence. During the first half of 1995, hardware sales rose, buoyed by falling Pentium prices. Microsoft, chipmakers, and PC manufacturers forecast that Windows 95 would produce continued high demand.

Whoops. When Windows 95 was introduced last August, "a lot of businesses took a wait-and-see attitude," says Sargent. "Then in the fourth quarter they said, 'No, we're waiting for NT.' " Microsoft's sales are still strong, but the company is feeling the impact of this corporate ambivalence. Dataquest, a San Jose research firm, recently lowered by 27% its estimate of the units of Windows 95 that Microsoft will ship this year.

"We weren't as clear as we should have been in the early days of Windows 95 and NT," admits Bob McDowell, Microsoft's vice president for enterprise business relationships. "Customers asked us which program to choose, and we would say, 'Either is okay.' " Now Microsoft is trying to get it right--it even offers counseling sessions in which users describe their needs and get a recommendation of whether to go for NT or 95.

"All this PC network equipment is great when it works, but it breaks a lot. One guy I know was actually told not to use his company's E-mail system in the afternoon because it was a high-traffic time." --Industry analyst Denise Caruso

Client-server networks were supposed to streamline business processes, put power in the hands of employees, and cut the heavy computing costs associated with mainframes. It hasn't worked out quite that way. Jim Lee, supervisor for technical support at Nissan Research & Development in Farmington Hills, Michigan, actually considers the client-server phenomenon a fad. "The hidden cost of support and service of client-server far exceeds the cost of mainframes," he says.

The Gartner Group's ongoing study of the cost of client-server computing shows that a PC on a corporate network eats up about $12,000 a year over five years. The hardware and software account for just 21% of the expense. Labor costs, including administration, training, and support, are four times the amount of the capital investment.

No wonder companies like Bell Atlantic Nynex Mobile are backing off and buying more discriminately. Created by the merger of Bell Atlantic Mobile's and Nynex Mobile's cellular operations, $1.9 billion BANM (pronounced "banum") is typical of companies that have hopped off the upgrade roller coaster. Says BANM chief information officer Maryann Goebel: "We're not in a rapid replacement environment. Most of the new PCs we install are due to growth in the employee base." Hooked to BANM's networks are a variety of faster and slower PCs, DEC VAX and Alphas, and IBM mainframes. Most desktops run OS/2, while a few use Windows 3.1. A lone employee uses Windows 95. "He had it at home, and he wanted it at work, and he's our president, and we said okay," says Goebel with a smile.

Goebel refuses to be defensive about preserving her company's investment in existing IT. In fact, one DEC VAX still sports a sign lauding it as Datamation's Product of the Year for 1990. "Obviously we're not concerned about appearances," says Darla Como, director of BANM's data center. Neither are many other companies. Kathleen Fiore, CIO of Urohealth Systems, a $100 million medical products company in Newport Beach, California, says, "If your software runs just a few seconds faster on a Pentium than on a 486, why upgrade? It may be technically elegant, but it doesn't make business sense."

Increasingly, what does make business sense is a good old-fashioned mainframe. Says BANM's Goebel: "I said to the IBM rep the other day, 'The mainframe is my friend.' " Who can blame her? Next to unstable LANs, mainframes are looking less like dinosaurs and more like sharks--surviving every stage of evolution, moving constantly forward. That's not to say that the current health of the mainframe market comes from a throng of new customers. Says Andy Hurter, general manager for North American sales of IBM's System/390: "Obviously some of the growth is inventory replacement." But even if IBM isn't winning converts, the fact that its old mainframe customers are deciding to update their monster boxes is compelling. Many of these companies had intended to switch over to PC LANs by now; disenchantment with distributed computing has led them to stick with the devil they know.

"We buy a lot of technology not so much for what it does but so that we can say we have it." --Jerry Behrens, head of business development for Tzell Travel Specialists

Besides incessantly pushing upgrades and curtailing support of older products, the computer industry has done a great job of propagating the fallacy that if you don't have the latest and greatest toys, you're toast.

At Tzell Travel Specialists, a $100 million agency in New York City, Jerry Behrens invests in programs that perform nifty tasks like automatically upgrading frequent fliers the moment the 72-hours-to-takeoff window opens, no matter what hour of the day or night. Such software does help Tzell win accounts from other agencies. But Behrens finds that clients hardly ever take advantage of many of the bells and whistles that drew them to Tzell--once they're customers, they decide they want their itineraries in the hands of agents who have, well, hands. Behrens applauds their instinct: He argues that national travel firms that rely on automated software to search for fares or airplane seats provide inferior service. "We get better results by calling the airline sales office and asking them personally to make a seat available to us," he says.

Behrens would love to dispose of much of the fancy technology. But there's one hitch: He thinks he'd sound like a Luddite if he based a client pitch on superior customer service rather than automated tools. So he buys the software he doesn't really need.

Microsoft's Bob McDowell argues that the software giant isn't the only force pushing corporations to upgrade, and he's got a point. "These advances aren't totally blamable on Microsoft. We're a big player, so we're going to become a lightning rod, but employees are putting pressure on their companies for the technology at work to be at least as powerful as the technology at home," he says.

But some companies know that's not reason enough to lay out the cash: Employees don't always need what they want. Kathy Cruz, the former CIO of VeriFone, the $390 million Redwood City, California, electronic payment company, got a lot of guff from employees who wished CEO Hatim Tyabji were a little less proud about never having stepped on the upgrade treadmill in the first place. The company's main software is an old no-graphics program that runs off a DEC VAX. Employees use it to perform every task from scheduling vacation days to ordering business cards.

"If you asked our employees whether they'd like to upgrade the technology in certain areas, you'd probably get a resounding yes," said Cruz, interviewed before she left to become CIO of Aspect Telecommunications, a San Jose company that helps businesses with their telephone support centers. "Somebody will ask when we're going to get rid of the VAXes. I'll say, 'It sounds like you need something you're not getting. Tell me more.' 'Well, I don't know. The VAXes are old.' My emphasis is on filling the need with whatever technology suits the task, not in spending money on prestigious products." Only those few employees who need graphics or other "high-end" applications get 486 or Pentium PCs. The tech-support guy is stuck with a sensible but slo-mo 386 machine. When he returns to his cubicle after repairing a colleague's high-end PC, he always does a double take before remembering that his computer isn't broken--it's old. "I get spoiled fixing the faster machines," he says.

"We're in what we call a trough of disillusionment about computer products." --Lynn Berg, research area director for distributed and personal systems at the Gartner Group

Corporate reluctance to adopt Windows 95 was an early signal that businesses were rebelling against constant upgrades and runaway spending on information technology. But this change may be the result of something deeper: PCs have now been around so long that we know what we can expect of them--and it's not as much as we had hoped.

Lynn Berg describes a "hype cycle" that she uses to illustrate the mentality of the technology market. Bleeding-edge customers buy technologies soon after their introduction. They think they can gain a competitive edge and don't mind that the technology hasn't matured. As the hype increases and the product becomes user-friendly, more companies adopt it in an effort to keep up. Typically, the end of the cycle comes when other customers give in and invest, if only to save money because maintaining older technologies becomes too costly.

Thus we come to the low point of the hype cycle: the dread trough of disillusionment. Just when the market for a product is largest, the product is no longer hot. Latecomers buy at a point in the cycle when expectations are very low.

The problem for the computer industry now is that corporate expectations are lower than ever before. For example, few infotech customers are so naive that they still believe PCs and LANs will automatically help them increase productivity. Indeed, quantifying productivity gains from information technology is so elusive that consultants have given up trying to measure it. Says Fred Magee, Gartner's research director for the business management of IT: "Just because you get two hours back a week doesn't mean you spend those two hours being more productive. You might go out for a soda instead."

Or eat Chinese. At one company a group of computer hardware technicians in New York City managed its accounts so well that the volume of support calls dipped low enough that only one technician was needed at any time. The group gave all their pagers to one technician and spent the days visiting Chinatown, museums, and the occasional strip club. A different specialist stayed behind each workday and handled service calls while his compatriots checked in to make sure there were no emergencies. Says Magee: "Having the time and resources to be more productive made them more innovative in ways to use their time, but it didn't actually make them more productive." Such stories help explain the power of this trend. As Jerry Michalski, managing editor of the influential industry newsletter Release 1.0, says, "There are now valid strategies for saving money by skipping generations of hardware and software." Companies that are cataloguing their computer assets and choosing companywide standards aren't going to revert to the days of desktop chaos. Companies that have hopped off the upgrade treadmill aren't going to get pushed back on.

Even the huffiest of techno-snobs is ready with a list of tips for companies that want to join the rebel forces and put vendors in their place. The basic idea is to give your MIS department a time-out--as if they were a bunch of unruly toddlers--and freeze your IT budget until every bit of hardware and software in the company is accounted for. Select a few dependable vendors and standardize on industry-accepted platforms companywide. Then pick and choose your upgrades based on what your company needs--not what your competitors are doing. Muster the confidence to let them spend themselves out of the race, like Russia.

Another option is to just lease your equipment. That's what multimedia marketing company CKS Group does. Says CFO Carlton Baab: "Buying machines puts you into the support business. We're paying a slight premium to lease, but it allows us to focus on our work." GE Computer Services, the division of GE Capital that leases PCs to CKS, also provides full support services. If a machine breaks or if a new hot product comes out that will create the Website of a client's dreams, CKS has it within hours.

Jerry Michalski suggests that companies that feel they have to buy need to stay especially alert. "Familiarity leads to an understanding of which generations to skip. If you've never explored the new version of Netscape or worked on a Pentium, then you won't see which technologies are obvious skippers," he says. Moreover, an intimate knowledge of the industry helps you make investments in technologies whose direction you can influence.

That may explain why more and more corporate dollars are flowing into intranets. According to Zona Research, a Redwood City research outfit, corporate spending on intranet server software will reach $5.5 billion next year, up from $476 million in 1995. Besides offering more flexibility, using the Internet technology that runs intranets holds the promise of independence from vendors like Microsoft and Intel. Says Michalski: "One of the keys to the great success of Netscape and the Internet is that they're not Microsoft. Part of the appeal here isn't just the mantra of open systems but the desire to foster a more competitive environment." Infotech customers are trying to prove they're not cattle. Whether they'll find greener pastures than the ones they graze in now is an open question, but they're looking harder than ever.