Aging IT Infrastructure Drives IT Budget Increases in 2019
December 12, 2018
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Nine out of ten (89 percent) companies expect their IT budgets to grow or remain flat in 2019. Although factors driving budget increases vary significantly by company size, 64 percent of those planning to increase budgets are doing so to upgrade outdated IT infrastructure, according to the 2019 State of IT Budgets report from Spiceworks.

Across all company sizes, 38 percent of organizations expect IT budgets to increase in 2019, and 51 percent expect them to remain flat year over year. Organizations that expect budget increases next year anticipate a 20 percent increase on average, up from 19 percent in 2018. Only 6 percent of companies expect their IT budget to decrease in 2019, compared to 11 percent in 2018. Larger organizations are most likely to see their budgets grow: 56 percent of companies with more than 5,000 employees expect IT budgets to grow, and 43 percent expect them to stay the same in 2019.

When comparing the factors driving budget increases by company size, large enterprises (88 percent) are more likely to boost their budgets due to increased security concerns. In contrast, IT budgets at midsize organizations are more likely to grow due to corporate tax cuts: 35 percent of businesses with 500 to 999 employees reported increased tech budgets for 2019 because of lower taxes.

“Most organizations, particularly small businesses, are increasing IT budgets in 2019 to upgrade aging IT infrastructure and support digital transformation initiatives,” said Peter Tsai, Senior Technology Analyst at Spiceworks. “However, large enterprises, typically with more data and devices to lock down, are primarily increasing budgets due to growing security concerns. With more employees to target, larger organizations recognize the importance of boosting budgets to protect against phishing attacks and avoid potentially crippling malware.”

IT Budget Allocations

Organizations plan to spend 35 percent of their IT budgets on hardware in 2019, up by 4 percentage points year over year. Software and cloud budget allocations remain steady year over year at 26 percent and 21 percent respectively, while budget allocations for managed IT services grew by 1 percentage point to 14 percent of budgets. However, IT budget allocations vary greatly by company size.

Small organizations with less than 100 employees are planning to significantly increase their hardware investments from 31 percent of their total IT budget in 2018 to 42 percent in 2019.

Conversely, large enterprises plan to slightly increase their cloud budgets. Companies with 1,000 to 4,999 employees plan to allocate 22 percent of their IT budgets toward hosted/cloud-based services, up by 2 percentage points year over year, and enterprises with more than 5,000 employees plan to allocate 24 percent of their IT budgets toward cloud services, up by 3 percentage points year over year.

Budget highlights within each category include:

■ In hardware, budget allocations for desktops (18 percent), laptops (17 percent), servers (12 percent), and power and climate (7 percent) hardware top the list.

■ Top software budget allocations include operating systems (12 percent), virtualization (10 percent), productivity (10 percent), and security software (10 percent).

■ Online backup and recovery leads spending in the hosted/cloud-based services category: 15 percent of cloud budgets are allocated towards online backup/recovery, followed by email hosting (11 percent), online productivity (9 percent), and web hosting (9 percent) services.

■ In managed services, 11 percent of budgets will be spent on managed hosting, followed by managed storage/backup (10 percent), managed security (9 percent), and managed business applications (8 percent).

Technology Purchase Decisions

Spiceworks also examined the roles various individuals play in the technology purchase process. The president/CEO is involved the technology purchase decisions in 38 percent of organizations, line of business directors are involved in 32 percent of companies, and finance managers are involved in 28 percent of organizations.

However, across all company sizes, IT decision makers (ITDMs) are nearly twice as likely to be the sole decision maker for most technology categories when compared to business decision makers (BDMs). In small businesses, ITDMs are nearly four times as likely to be the sole decision maker. When involved, BDMs are more likely to either provide final approval or veto the deal after ITDMs have made their vendor and product selection.

Methodology: The survey was conducted by Spiceworks in July 2018 and included 780 respondents from North America and Europe. Respondents are among the millions of business technology buyers in Spiceworks and represent a variety of company sizes including small-to-medium-sized businesses as well as enterprises. Respondents come from a variety of industries including manufacturing, healthcare, non-profits, education, government, and finance.

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