The annual CIO Tech Poll: Economic Outlook research (opt-in required) from IDG provides insights about CIO Investments in Tech.
CIO Investments in Tech for 2019 reveal that IT budgets will begin to level out as IT executives are focused on balancing innovation and maintaining the status quo. This does not mean, however, that organizations are decreasing their tech budgets.
- 7% of IT executives expect their budgets to decrease over the next 12 months
- 55% expect an increase and 32% expect their budgets to remain the same
CIO Investments in Tech – Key Takeaways
IT executives are beginning to better estimate the growth of their technology budgets year over year
- 55% expect an increase in tech budgets over the next 12 months
- 44% said their tech budgets increased over the past 12 months
Multiple factors affect IT budget shifts, including systems upgrades/maintenance and new projects from Line of Business.
97% of IT executives report that their organization is likely to reinvest cost savings from IT efficiencies
- These cost savings will go towards new technologies to improve customer engagement/satisfaction, and to improve security
Security budget is expected to increase as potential threats increase
- 62% of IT executives say they will increase the percent of IT budget dedicated to security solutions
- 41% report there will be an
increase in the percent of IT budget dedicated to security risk analysis
CIO Investments in Tech – IT Budgets, Cost Savings & Efficiencies
More than half of organizations (55%) plan to increase IT budgets in the next 12 months, compared to 57% that had committed to increased budgets in November 2018. At the same time, organizations holding IT budgets steady reached 32% in May, down from 34% in November. Only 7% of organizations plan to decrease IT budgets. 79% of organizations have realized at least some cost savings over the last 12 months from IT efficiencies, and they’re planning to reinvest those dollars into technologies that increase customer satisfaction and engagement, improve security and support business goals.
IT BUDGET CHANGES IN THE NEXT 12 MONTHS
55% see an increase
32% plan to remain the same
7% expect a decrease
CIO Investments in Tech – What’s Behind Tech Budget Shifts?
As IT budget growth begins to level out, many organizations plan to reinvest cost savings from IT efficiencies into security and innovation projects
The factors that caused last year’s IT budgets to shift included:
- systems upgrades/maintenance (40%)
- changes to IT project scope (29%)
- new mandates from executive management/Board of Directors (29%)
- a change in the number of IT projects funded by lines of business (27%)
IT leaders are bracing for future budget shifts in many of these same areas, with:
- 52% expecting more funds diverted to systems upgrades and maintenance
- 38% seeing changes in the number of IT projects funded by lines of business
- 35% foreseeing new mandates from executive management and the board
- 34% seeing budget shifts due to regulatory compliance requirements
HOW TECH BUDGET COST SAVINGS ARE BEING REINVESTED
45% New technologies to improve customer engagement/satisfaction
45% New/upgraded technologies to improve security
39% New technologies to support business goals
Enterprise organizations are much more likely than small to mid-size businesses to say that a change in the number of IT projects funded by LOB will cause a shift in their IT budget (57% vs. 30% SMBs). It is also more likely that new mandates from executive management will cause a shift (43% vs. 30% SMB).
CIO Investments in Tech – Security
IT leaders also acknowledge that unforeseen events, such as a major information security breach, could re-direct their IT budgets. Some 78% of IT leaders saying an event like this could impact investment plans in technology products and services, and 62% of IT executives report that they have already increased the percent of the IT budget dedicated to security solutions proactively. GDPR fallout and new data privacy and industry regulations are additional investment wild cards.
78% OF IT EXECUTIVES SAY THAT THE THREAT OF MAJOR SECURITY BREACHES WILL IMPACT THEIR ORGANIZATIONS INVESTMENT PLANS
Several factors are expected to impact organization’s investment plans in technology, most notably the threat of a security breach. As mentioned above, more than three-quarters of IT executives say that the threat of major information security breaches will have an impact on their investment plans.
IT executives are:
- increasing the percentage of IT budgets allocated toward security solutions (62%)
- more thoroughly researching the security posture of IT vendors (39%)
- increasing the percent of IT budget dedicated to security risk analysis (41%)
- limiting IT purchases and engagements to known and trusted vendors (24%)
- and hiring new employees with security skill sets (18%)
SECURITY BUDGET INCREASES AS POTENTIAL THREATS INCREASE
62% Increasing the percent of the IT budget dedicated to security solutions
41% Increasing the percent of the IT budget dedicated to security risk analysis
39% More thoroughly researching the security posture of IT vendors
24% Limiting IT purchases & engagements to known/trusted vendors
18% Hiring new employees with security skill sets
While enterprises and SMBs share similar thinking on these security steps, enterprises were more likely to spend IT dollars on security solutions (66% enterprises vs. 60% SMBs), while SMBs were more likely to allocate part of the budget to security risk analysis (29% enterprises vs. 47% SMBs) – making sure that controls and expenditures are align with the risks that the organization is exposed to.
CIO Investments in Tech – Allocation of IT Budgets
What will IT leaders spend this year’s IT budgets on? On average, 69% of IT budgets are allocated to solutions to maintain the business. These include tools that keep the lights on and run the business, such as administrative tasks, operations activities, and inventory replacement. Most of the remainder of IT budgets (28%) will focus on solutions for growth and innovation. With digital transformation becoming such a hot topic of conversation, and 91% of CIOs indicating that their role is becoming more digital and innovation focused, it is not surprising to see this spending on innovation.
When it comes to decision-making on tech investments, the IT department drives most (but not all) decisions and collaborates with LOB colleagues more broadly within some investment areas than others. The survey shows the greatest IT involvement in cloud computing investments, followed by communication/collaboration, mobility and the Internet of Things. When it comes to data and analytics investments, some responsibility is being distributed to:
- finance and accounting (35%)
- operations (32%)
- marketing (26%)
- administration (24%)
- sales (22%)
Operations teams are most often involved when looking at communication and collaboration tools. Engineering also has influence in artificial intelligence decisions, machine learning and Internet of Things investments. Among those departments making technology purchases, operations and marketing teams are most likely to increase their tech-related budgets. Some 48% of IT leaders expect the budget for tech purchases in their operations departments to increase over the next 12 months, and 42% report this for marketing. The non-IT departments with the least amount of tech budget growth include human resources, administration, finance/accounting and sales.
IT Efficiencies = Cost Savings
IT executives confirm that past IT investments are yielding efficiencies and cost savings, with 79% saying that their organization has experienced at least some cost savings in the last 12 months. Nearly all of these organizations plan to reinvest those savings into technologies that increase customer engagement and satisfaction and improve security (both 45%). Almost half (45%) of enterprises say they will reinvest in technologies that support business goals, compared to 36% of SMBs that will do the same.
IT executives are beginning to better estimate the growth of their technology budgets year over year – 55% expect an increase in tech budgets over the next 12 months, while 44% said their tech budgets increased over the past 12 months. Multiple factors affect IT budget shifts, including systems upgrades/ maintenance and new projects from lines of business. We also see that IT budget is spread between status quo and innovative projects. Nearly all IT executives (97%) report that their organization is likely to reinvest cost savings from IT efficiencies. These cost savings will go towards new technologies to improve customer engagement/satisfaction, and to improve security.