IT Budget Growth Shows Consistency as Organizations Invest in Technologies to Improve Security and the Customer Experience
2019 CIO Tech Poll: Economic Outlook research provides insight into the business factors influencing tech spending trends
Boston, Mass. – June 27 – IDG’s CIO – the executive-level IT media brand providing insight into business technology leadership – releases 2019 CIO Tech Poll: Economic Outlook research analyzing how current economic conditions are affecting spending plans among IT leaders (click to tweet). This year’s survey reveals that IT budgets will begin to level out as IT executives are focused on balancing innovation and maintaining the status quo. Though the case, this does not mean that organizations are decreasing their tech budgets. In fact, only 7% of IT executives expect their budgets to decrease over the next 12 months – the lowest percentage since the study began reporting on the statistic in 2010.
In 2018, 57% of IT executives anticipated their budgets would increase; but when asked this year about their last budget cycle, only 44% of respondents confirmed this was the case. Put simply, the research shows an over-estimation of budget increases. “The consistency around expectations vs. reality is important because it helps IT leaders better prepare for their projects, in terms of scope and numbers,” said Adam Dennison, SVP/publisher, CIO. “This year, 55% of IT executives reported they expect their budget to increase. Time will tell if IT leaders are gaining a better understanding of their budget growth and the expectations that come year-over-year, or if the optimism factor is still at play.”
There are several tech priorities impacting budgets. The factors expected to cause future budget shifts include systems upgrades/maintenance (52%), change in the number of IT projects funded by LOB (38%), new mandates from executive management (35%), and regulatory compliance requirements (35%). This aligns with the reasons that influenced past budget shifts. Additionally, 67% of respondents acknowledged that dedicated tech budgets in LOB departments fluctuate due to current and upcoming projects/initiatives.
IT Budget Allocation
On average, 69% of IT budgets are allocated to solutions to maintain the business. These consist of tools and technologies that handle administrative tasks, operations activities, and inventory replacement. Another 28% of the budget is then allocated towards solutions delivering growth and innovation. Going forward, it should not be surprising to see this number increase as 91% of CIOs noted their role is becoming more digital and innovation focused.
IT is primarily responsible for driving these tech investments. Specifically, they have the strongest influence in cloud computing spending (74%), followed by communication/collaboration (58%), Internet-of-things (55%) and then mobility (54%). It’s also important to note that tech spending outside of the IT department is expected to either increase or remain the same across the board in 2019. Most notably, IT leaders foresee increased tech budgets for both operations (48%) and marketing (42%).
“IT does not have to own the entire budget in order to influence how dollars are spent within the organization,” continued Dennison. “We’re seeing collaboration increasing between the IT department and LOB, where both sides are coming together to make sound investments to benefit the business.”
Factors Impacting Investment Growth
There are several business-related events expected to impact organization’s investment plans. In particular, 78% of IT executives noted that the threat of major information security breaches will influence their spending habits. This is understandable given the ongoing rise in cyberattacks and potential consequences involved. According to the 2018 U.S. State of Cybercrime Survey, 23% of organizations reported increased monetary losses due to security breaches.
To help defend against security breaches, organizations are taking action in the following ways: increasing the percent of the IT budget dedicated to security solutions (62%) and risk analysis (41%), more thoroughly researching the security posture of IT vendors (39%), and limiting IT purchases and engagements to known/trusted vendors (24%). In addition to concerns over security, industry regulations (57%) and GDPR/privacy regulations (53%) will impact spending plans.
The U.S. economy and global trade are fueling concern amongst some organizations as well. Political events impacting investment plans include actions/decisions of U.S. executive leadership (64%), global trade wars (56%), changes in U.S. economic policy and status (54%), and changes in global trade policies (52%).
Cost Savings from IT Efficiency Measures
Tech budgets have been on the rise since 2016 helping to fuel IT efficiencies within organizations. This year, 79% percent of organizations have realized cost savings over the past 12 months as a result of IT efficiencies. Of this group, 97% plan to reinvest these funds to help advance their business – namely, into new technologies to help improve customer engagement/satisfaction (45%). This correlates directly with the findings reported in the 2019 Digital Business research, where 67% of organizations said creating better customer experiences was the top objective of their digital business strategy.
In addition to enhancing the customer experience, organizations are using cost savings to improve security (45%), support business goals (39%) and implement new technologies to help employees succeed (35%).
To view additional information on the research, please visit: IDG.com.
About CIO Tech Poll: Economic Outlook Research
The CIO Tech Poll: Economic Outlook research is conducted annually, among heads of IT, to gauge how current economic conditions are impacting IT spending. The current CIO Tech Poll: Economic Outlook was conducted between March 6, 2019 and April 30, 2019 across the CIO customer database. Results are based on 152 respondents who indicated they are the top IT executive at their company or business unit.
CIO focuses on attracting the highest concentration of enterprise CIOs and business technology executives with unparalleled expertise on business strategy, innovation, and leadership. As organizations grow with digital transformation, CIO provides its readers with invaluable peer insights on the evolving CIO role as well as how leading IT organizations are employing technologies, including automation, AI & machine learning, data analytics and cloud, to create business value.
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