Aging IT Infrastructure Drives IT Budget Increases in 2019
December 12, 2018
Share this

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increases vary significantly by company size, 64 percent of those planning to increase budgets are doing so to upgrade outdated IT infrastructure, according to the 2019 State of IT Budgets report from Spiceworks.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.

Share this

The Latest

October 14, 2021

Businesses are embracing artificial intelligence (AI) technologies to improve network performance and security, according to a new State of AIOps Study, conducted by ZK Research and Masergy ...

October 13, 2021

What may have appeared to be a stopgap solution in the spring of 2020 is now clearly our new workplace reality: It's impossible to walk back so many of the developments in workflow we've seen since then. The question is no longer when we'll all get back to the office, but how the companies that are lagging in their technological ability to facilitate remote work can catch up ...

October 12, 2021

The pandemic accelerated organizations' journey to the cloud to enable agile, on-demand, flexible access to resources, helping them align with a digital business's dynamic needs. We heard from many of our customers at the start of lockdown last year, saying they had to shift to a remote work environment, seemingly overnight, and this effort was heavily cloud-reliant. However, blindly forging ahead can backfire ...

October 07, 2021

SmartBear recently released the results of its 2021 State of Software Quality | Testing survey. I doubt you'll be surprised to hear that a "lack of time" was reported as the number one challenge to doing more testing, especially as release frequencies continue to increase. However, it was disheartening to see that a lack of time was also the number one response when we asked people to identify the biggest blocker to professional development ...

October 06, 2021

The role of the CIO is evolving with an increased focus on unlocking customer connections through service innovation, according to the 2021 Global CIO Survey. The study reveals the shift in the role of the CIO with the majority of CIO respondents stating innovation, operational efficiency, and customer experience as their top priorities ...

October 05, 2021

The perception of IT support has dramatically improved thanks to the successful response of service desks to the pandemic, lockdowns and working from home, according to new research from the Service Desk Institute (SDI), sponsored by Sunrise Software ...

October 04, 2021

Is your company trying to use artificial intelligence (AI) for business purposes like sales and marketing, finance or customer experience? If not, why not? If so, has it struggled to start AI projects and get them to work effectively? ...

September 30, 2021

As remote work persists, and organizations take advantage of hire-from-anywhere models — in addition to facing other challenges like extreme weather events — companies across industries are continuing to re-evaluate the effectiveness of their tech stack. Today's increasingly distributed workforce has put a much greater emphasis on network availability across more endpoints as well as increased the bandwidth required for voice and video. For many, this has posed the question of whether to switch to a new network monitoring system ...

September 29, 2021

When a website or app fails or falters, the standard operating procedure is to assemble a sizable team to quickly "divide and conquer" to find a solution. The details of the problem can usually be found somewhere among millions of log events and metrics, leading to slow and painstaking searches that can take hours and often involve handoffs between experts in different areas of the software. The immediate goal in these situations is not to be comprehensive, but rather to troubleshoot until you find a solution that remedies the symptom, even if the underlying root cause is not addressed ...

September 28, 2021

Evaluating which products and vendors can meet today's modern and complex IT business requirements is a challenge. To help, I'd like to explore 10 key questions every IT admin should be asking when evaluating or working with network performance tools ...