SMEs are looking at an increase of only 3% next year, while large companies do not expect an increase in their IT budgets, says a study by IT management research firm Computer Economics.
Top 5 budgeting errors to watch out for
Disorganization, illogical budgets and only one budget owner are just a few of the problems that can affect your company’s finances. Tom Merritt offers five budgeting errors to stay away.
IT departments that are looking to improve their budgets next year may be disappointed.
Released on Wednesday, Computer Economics’ Worldwide IT Spending and Staffing Outlook for 2020 report reported modest expectations in budget growth of the IT leaders surveyed. Among small and medium-sized businesses, IT leaders see their budgets increase by only 3%. But for large companies, IT leaders do not see an increase in the budget.
SEE: IT budget template all year round (TechRepublic Premium)
The projections for 2020 are roughly in line with the actual budget gain in 2018 and 2019, which, according to Computer Economics, was between 2% and 3%. However, the sentiment for next year has become more negative. That is because the prediction of moderate to no budget growth has been a familiar story for IT departments for years. And some managers interviewed by Computer Economics were frustrated with the same old story.
“(Our outlook) would be good if senior management would allow us to increase our budget in line with sales growth,” an IT manager interviewed said.
“As a government, we already spend less than necessary to improve services effectively,” said a director of a government IT department. “Reducing budgets and staffing will only aggravate the problem, leaving us further behind in other jurisdictions. IT should be considered as an investment and not an expense.”
SEE: 2020 IT budget research report: security, cloud services and digitization are top budget priorities (TechRepublic Premium)
IT budgets see higher spending on security
Whether or not budgets increase, IT leaders generally plan to increase spending on security but to reduce spending on the data center. This fall in data center spending comes as more companies turn to
(Software as a Service) and public clouds that move the infrastructure away from internal data centers. Because companies invest in public cloud infrastructure, automation and other external services, they can increase their capacity without adding staff or hardware, which offers greater efficiency in a time of stagnating budgets.
“For years, managers have been expected to make room in their own budget through the cloud transformation,” said David Wagner, vice president of research for Computer Economics, in a press release. “But many of those easier cloud projects are now complete and finding budgets for new projects is becoming increasingly difficult. IT leaders know how to transform their departments, but they don’t get much help from the company in terms of budget increases.”
In general, according to the survey, IT leaders are optimistic, but not enthusiastic about spending in 2020. Although some respondents were frustrated because they had to keep the line on new spending, Computer Economics believes that this pattern is better than large budget increases that lead to major cuts on the road.
The annual reconnaissance survey of Computer Economics is conducted from October to December. This year’s online survey has received responses from 173 IT leaders in the US and Canada, and 97 from the rest of the world. In total, 43.9% of respondents come from the US and Canada; 36.4% from Europe, the Middle East and Africa; 11% from Asia Pacific and 8.7% from Latin America.
In the US and Canada, large companies with annual sales of more than $ 1 billion accounted for 15.6% of responses. Medium-sized organizations with revenues ranging from $ 350 million to $ 1 billion represented 24.3%, and small organizations with annual revenues of less than $ 350 million were 60.1%.
Among different sectors, production accounted for 22.5% of answers, followed by professional / technical services at 20.2%, government / non-profit organizations at 14.5%, financial services at 12.7%, retail / wholesale at 12.1%, utilities at 5.8%, health care with 5.8% and other industries with 6.4%.
Executive Briefing Newsletter
Discover the secrets of the success of IT leadership with these tips on project management, budgets and dealing with daily challenges.
Delivered on Tuesday and Thursday
Image: simpson33, Getty Images / iStockphoto