HOW BUSINESSES ARE SPENDING THEIR TECHNOLOGY BUDGETS IN 2020

Spiceworks, Inc. conducted a survey in July 2019 that included 1,005 business technology buyers from organizations across North America and Europe. Of the companies surveyed, 34% had 1-99 employees, 30% had 100-499 employees, 10% had 500-999 employees, 13% had 1,000-4,999 employees, and 13% had 5,000+ employees. The following are some of the survey findings that were recently released by Spiceworks in “The 2020 State of IT: The Annual Report on IT Budgets and Tech Trends”:

Expected Revenue Change from 2019: 58% of these companies expected their revenue to increase in 2020, while another 25% expected no change from the prior year. While COVID-19 may very well affect these revenue projections, this survey nonetheless provides insight into how companies are allocating funds to their IT departments and how these funds will be utilized in 2020.

IT Budget Growth: IT budgets often increase in conjunction with revenue growth. The survey found that 44% of businesses plan to increase their tech spend in 2020 (up from 38% in 2019) with another 44% keeping their budget the same as 2019. The organizations that expect IT budget growth anticipate an 18% increase on average. Businesses in North America expect an IT budget boost of 50% in 2020 compared to 39% in Europe. Among different company sizes, enterprises with 1,000 to 4,999 employees are most likely to increase IT budgets in 2020.

Budget Drivers: The following are the top drivers for increased IT budgets in 2020:

 

 

 

 

 

 

 

 

However, budget drivers vary by company size and location. For instance, 25% of companies with 1,000+ employees are increasing their IT spend due to a recent security incident (compared to 13% overall). North American businesses are more likely to increase spending in order to upgrade outdated infrastructure whereas European businesses are more likely to increase IT spending due to regulations like GDPR.

 

Emerging Tech Trends: The chart below shows how technology budgets will be allocated across hardware, software, cloud services, and managed IT services.

Budgets for software, cloud, and managed services will remain steady year over year, but the mix varies depending on company size. For example, the smallest companies will spend a significantly greater percentage of their IT budgets on hardware, but as company sizes grow, enterprises will spend less on hardware and more on managed IT services.

Future Tech in the Workplace: Looking ahead, 5G technology is poised to see the most growth among emerging technologies with adoption expected to quintuple by 2021, while businesses' adoption of AI technology is expected to nearly triple, and adoption of hyperconverged infrastructure, edge computing, and serverless computing is expected to double.

 

 

Large enterprises (5,000+ employees), which tend to place a greater priority on IT and have more resources than SMB’s, are adopting emerging technologies up to 5 times faster than small businesses. Two-thirds of large enterprises plan to deploy 5G technology by 2021 and 31% have adopted some form of blockchain technology (compared to 6% of small businesses).

Further findings from Spicework’s survey can be accessed at https://www.spiceworks.com/marketing/state-of- it/report/.

Telergy LLC is a cost management consulting company helping middle-market companies, including professional service firms, reduce and control their Technology, Telecom and Energy costs. To contact Telergy, please send an email to Mark Friedman, Chief Optimization Officer, at mfriedman@telergyllc.com or call 312-736-8900x100.

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