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Knowing how and where to spend money from a technology budget can be a challenge for any organization. You have to fine-tune what you can squeeze out of a tight budget yet still allocate enough money to fund your cyber defenses, digital transformation, and other crucial projects. A report published Tuesday by technology marketplace Spiceworks Ziff Davis looks at how and where those precious IT dollars will be spent next year.

SEE: Digital Transformation: A CXO’s guide (ZDNet/TechRepublic special feature) | Download the free PDF version (TechRepublic)

For its new report “The 2021 State of IT: The Annual Report on IT Budgets and Tech Trends,” Spiceworks Ziff Davis surveyed 1,073 business technology buyers across North America and Europe during June and July 2020. One difficult task they face is unsurprisingly related to COVID-19. How do you find the money required to support and secure a remote workforce in the midst of slower business revenue due to the pandemic and lockdown?

The survey found that growth in technology budgets has slowed compared with last year. Among the respondents, 33% said they’re planning for an increase in their IT budgets for 2021, but that’s down from 44% who said the same thing about 2020.

Some 17% expect their budgets to drop next year. Still, that leaves around 80% who expect their budgets to stay the same or go up.

The COVID-19 outbreak and its side effects will drive much of the decision making regarding technology budgets. Among those surveyed, more than half said they aim to retain their flexible work policies, while 44% are looking to increase their digital transformation plans. Other goals mentioned include: 1) improving security and governance, 2) enhancing training to support remote workers, 3) connecting employees using secure and standardized tools, and 4) refining their disaster recovery plans to cover more scenarios.

SEE: Tech Budgets 2021: A CXO’s Guide (ZDNet/TechRepublic special feature) | Download the free PDF version (TechRepublic)

Among respondents eyeing a higher IT budget, other goals surfaced in the survey. Overall, replacing aging IT infrastructure and addressing security concerns will be among the two biggest factors driving growth in the tech budget. Other factors leading to bigger budgets include: 1) increased priority on IT projects, cited by 45% of those polled, 2) changes to business operations during COVID-19, cited by 38%, and 3) the need to support a remote workforce, cited by 36%.

Image: Spiceworks Ziff Davis

Due to the COVID-19 crisis and economic slowdown, certain areas for spending in 2021 will take a back seat.

Investing in employee growth will likely suffer as many organizations have put a freeze on hiring amid the pandemic. Spending on emerging technology is expected to decline dramatically, especially among smaller businesses, which will focus more on critical needs and less on cutting-edge tech. Hardware will still grab the largest portion of IT budgets next year, but spending in this category will continue to drop as more organizations invest in the cloud and managed services.

“During the rush to remote work caused by the pandemic, it quickly became clear that technology is the glue that keeps businesses and employees connected,” Peter Tsai, senior technology analyst at Spiceworks Ziff Davis, said in a press release. “With more people working remotely than ever before and face-to-face meetings out of the question, organizations wouldn’t have been able to maintain business continuity or keep productivity levels high without the many technologies companies rely on…including laptops, video conferencing, VPN, chat apps, internet connectivity, and more.”