What are CIOs buying?

How are technology budgets shifting?

According to Foundry’s yearly State of the CIO research, technology budgets appear to be recession proof and continue to see growth. Despite the fact that 77% of IT decision-makers say that where possible, they are consolidating vendor contracts to reduce expenses, more than half (56%) expect their tech budgets to increase, 35% expect them to remain the same and only 9% expect a decrease in 2023.

Many organizations may be increasing their technology spending to support remote work, digital transformation, and other initiatives that are essential for maintaining business operations during the pandemic. In fact, 64% say that their organization is accelerating work on technology projects expected to alleviate impact from the economic slowdown.

Found in the 2023 State of the CIO study, tech decision-makers expect their technology budgets to increase in 2023 to support security improvements, the need to upgrade outdated IT infrastructure, application modernization, and investment in new skills/talent. When asked about why they would expect a decrease in budget, the majority said economic instability/uncertainty and company finances/performance. So, while some companies may be cutting back on technology spending due to economic challenges, others are increasing their investment in technology to drive innovation and stay competitive in an increasingly digital landscape.

What are the business initiatives driving IT investments?

The business initiatives that will be the most significant in driving IT investments in 2023 are to increase operational efficiency, increase cybersecurity protections, transform existing business processes, improve the customer experience, improve profitability, and increase employee productivity. These actions prove to be the most important globally and require technology investments in order to achieve.

Increasing cybersecurity protections jumps to the number one initiative driving tech investments for healthcare, financial services, education, and government industries. IT executives in the manufacturing industry are more likely to say that transforming existing business processes will be most significant in driving IT investments. There are no significant differences by company size, other than the face that increasing cybersecurity protections ranks slightly higher for enterprise (1,000+ employees) organizations.

A large number of these business initiatives have increased in priority due to the current state of the economy. More than half (58%) of IT executives say that increasing operational efficiency and increasing cybersecurity protections has increased in priority due to the state of the economy. Following close behind are transforming existing business processes and improving profitability (both at 54%).

What technology initiatives are driving IT investments?

Like in other areas, security/risk management is the number one technology initiative expected to drive the most IT investment in 2023. This is followed by data/business analytics, application/legacy systems modernization, AI/machine learning, and customer experience technologies. CIOs are strongly focused on these technologies in order to achieve the business initiatives that they hope to achieve this year and the priorities set out for them from line of business.

Healthcare CIOs rank machine learning/artificial intelligence higher on their top technology initiatives (32%) compared to 11% government and 20% education. Manufacturing CIOs rank IT/OT (operational technology) convergence higher on their list of tech initiatives driving IT investments (31%) compared to 20% overall. Financial services and healthcare CIOs also rank customer experience technologies such as chatbots and mobile apps higher (30%) compared to 24% overall, 21% manufacturing and 20% government. Related to the customer experience, CIOs are using technology to improve CX by analyzing customer needs and behaviors, delivering products and services in new ways, adapting products and services to meet changing demands, and providing alternatives to face-to-face communication.

Which technologies are being invested in to help alleviate the impact of the economic recession?

When asked in January 2023 in Foundry’s CIO Tech Poll: Tech Priorities study, the majority of IT leaders (77%) expected the economy to go into a recession in 2023, or that the economy was already in one (32%). Despite this, we know that technology budgets remain strong and IT leaders are actually investing in a variety of technologies to help lessen the impact of the recession.

While the following technologies are also technologies that CIOs will invest in no matter the state of the economy, organizations are putting more emphasis on them in order to alleviate the impact of the economic recession, or impending recession. These include automation tools, cybersecurity tools, cloud adoption, worker productivity technologies, and AI/machine learning tools. Enterprise CIOs are more likely to invest in automation tools while SMB CIOs are more likely to invest in cybersecurity tools.

What technology products and services are being researched?

As technologies constantly evolve, IT leaders have to always be researching solutions in order to stay up-to-date on what’s available and ultimately what will be the most valuable for their business. Topping the list for technology initiatives that IT decision-makers are actively researching includes AI and machine learning, blockchain, secure access service edge tools, employee experience technologies, and IT/OT convergence. While blockchain tops the list for what IT is researching, it also ranks very high in the not interested category (55% are not interested). These are the tools that marketers must be aware of because this is where CIOs and ITDMs need the most resources to learn about these tools and how they can be integrated into their organization.

As technologies constantly evolve, IT leaders have to always be researching solutions in order to stay up-to-date on what’s available and ultimately what will be the most valuable for their business. Topping the list for technology initiatives that IT decision-makers are actively researching includes AI and machine learning, blockchain, secure access service edge tools, employee experience technologies, and IT/OT convergence. While blockchain tops the list for what IT is researching, it also ranks very high in the not interested category (55% are not interested). These are the tools that marketers must be aware of because this is where CIOs and ITDMs need the most resources to learn about these tools and how they can be integrated into their organization.

There are some slight differences in the technologies that SMB IT decision-makers are researching or have on their radar – AI and machine learning still ranks number one, followed by employee experience technologies, data analytics frameworks and containers and microservices.

When we combine technologies that are being both researched and piloted to see which ones are a little further down the decision-making process, AI and machine learning remains in top place, followed by data analytics frameworks, business process management/workflow automation, and employee experience technologies.

What technology products and services are already in place at organizations?

Educational resources are needed even when technology products and services are already in use at an organization because there very well could be features that they do not know about or upgrades that require additional learning. The technologies that are currently in place at organizations according to IT leaders are collaboration tools/technologies, BI/analytics tools, enterprise applications such as ERM and CRM tools, cybersecurity tools, and infrastructure consolidation/virtualization tools.

Very few CIOs say that they are not interested I these technologies and a decent percentage are actually upgrading or refining their use of these tools. Such as enterprise applications, IT process/operations management, cybersecurity, and infrastructure consolidation/virtualization tools.

The technologies in use do not change too much by company size, however the level of use slightly differs. For example, only 14% of SMBs are at the stage where they are upgrading their cybersecurity solutions, while 18% of enterprises are upgrading. Additionally, enterprise organizations are upgrading their enterprise applications (23%) compared to only 15% of SMBs, which may be due to the fact that enterprise organizations are outgrowing their current solutions.

Of the technologies that have been implemented within their IT department, there are a few that IT executives feel are the single most important technology project that their team is currently working on. Like with other areas, cybersecurity tops the list, followed by enterprise applications, business process management/workflow automation, AI and machine learning, and BI/analytics tools.

In which areas do CIOs expect their tech spending to increase?

The technologies that are expected to see the largest increase in spending over the next 12 months align with those that are in use or being actively researched. Close to two-thirds (65%) plan to increase their spending towards cybersecurity, followed by BI/analytics tools (49%), data analytics frameworks (45%), and AI & machine learning (45%). We see a new technology pop up here – robotic process automation (43% expect an increase in spending). Additional technologies IT leaders expect to see an increase in spending include business process management/workflow automation, customer experience technologies, SaaS migrations and cloud (non-SaaS) solutions.

How do CIOs evaluate emerging technology vendors?

As technologies evolve, more and more vendors are entering the space. CIOs are tasked with evaluating these vendors to ensure they have the best possible solution for their organization, so what do they utilize the assess? Leading the charts are pilot testing/product demonstrations. From Foundry’s Customer Engagement research, we also know that the most valuable product demonstrations are limited time, full function trials, in-person demonstrations of how the product works, virtual live demonstrations, on-demand video/webinar demonstrations, and non-time use of product with limited functionality.

Additional tactics that CIOs use to evaluate emerging technologies are attend external events and/or conferences, either virtual or in-person, talking to a small set of their peers, read reviews written by experts, create specialized team to review, and use research analyst firms and follow their best practices.

Do CIOs encounter challenges when attempting to implement emerging technologies?

With everything that is new, challenges occur. When it comes to new tech deployment, skills and staffing top the list of challenges. Half of IT decision-makers say they lack the appropriate skillsets for deployment and also just have a shortage of staff. Budget also rises as a top challenge, followed by a disconnect between IT and business leadership, IT culture is not progressive, and security concerns.

It’s important for marketers to understand these challenges so they can best equip their customers for purchase and implementation success. For example, if there is a skills shortage, make sure you offer adequate support throughout the process, and if there is IT and business leadership disconnect, additional resources so each party can fully understand the solution may help the situation.

To learn more about what CIOs are researching and implementing this year, download the 2023 CIO Tech Poll: Tech Priorities executive summary. View Foundry’s 2023 Customer Journey Poster for a deeper view of how the CIO is involved in the technology purchase process and the information they rely on throughout.