IT leaders expect only modest budget gains in 2020

SMBs are looking at just a 3% increase next year, while large companies don't anticipate any upsurge in their IT budgets, says a survey from IT management research firm Computer Economics.

IT departments looking for an upswing in their budgets next year may be disappointed.

Released on Wednesday, Computer Economics' Worldwide IT Spending and Staffing Outlook for 2020 report found modest expectations in budget growth from the IT leaders surveyed. Among small and medium-sized businesses, IT leaders are eyeing only a 3% increase in their budgets. But among large enterprises, IT leaders envision no boost in the budget.

SEE: Tech Predictions For 2020: More must-read coverage (TechRepublic on Flipboard)

forecast-for-it-budget-growth-2020-computer-economics.jpg

Computer Economics

The projections for 2020 are roughly in line with actual budget gains in 2018 and 2019, which was in the 2% to 3% range, according to Computer Economics. However, the sentiment for next year has turned more negative. That's because the forecast of moderate to no budget growth has been a familiar story for IT departments for many years now. And some of the managers surveyed by Computer Economics expressed frustration over this same old story.

"[Our outlook] would be good if senior management would allow us to increase our budget in line with the increase in revenue," said one IT manager surveyed.

"As a government we are already spending less than required to effectively improve services," stated a director at a government IT department. "Reducing budgets and headcounts will only exacerbate the issue causing us to fall farther behind other jurisdictions. IT needs to be considered an investment not an expense."

SEE: 2020 IT budget research report: Security, cloud services, and digitalization are top budget priorities (TechRepublic Premium)

IT budgets see increase spends on security

Whether the budgets increase or not, IT leaders in general are planning to increase spending on security but decrease spending on the data center. This decline in data center spending comes as more companies are turning to SaaS (Software as a Service), and public clouds that shift the infrastructure away from in-house data centers. As businesses invest in public cloud infrastructure, automation, and other outside services, they're able to increase capacity without adding staff or hardware, offering greater efficiency during a time of stagnant budgets.

"For years now, managers have been expected to make room in their own budgets through the cloud transformation," David Wagner, vice president of research for Computer Economics, said in a press release. "But much of those easier cloud projects are now complete, and finding budgets for new projects is getting harder. IT leaders know how they can transform their departments, but they are not getting much help from the business in terms of budget increases."

Overall, IT leaders are optimistic though not enthusiastic about spending in 2020, according to the survey. Though some respondents expressed frustration over having to hold the line on new spending, Computer Economics believes this pattern is better than large budget increases that lead to big cutbacks down the road.

SEE: Year-round IT budget template (TechRepublic Premium)

Survey demographics

Computer Economics' annual outlook survey is conducted from October through December. This year's online survey elicited responses from 173 IT leaders in the US and Canada, and 97 from the rest of the world. Overall, 43.9% percent of the respondents are from the US and Canada; 36.4% from Europe, the Middle East, and Africa; 11% from Asia-Pacific, and 8.7% from Latin America.

In the US and Canada, large companies with more than $1 billion in annual revenue accounted for 15.6% of the responses. Midsize organizations with revenue ranging from $350 million up to $1 billion made up 24.3%, and small organizations with less than $350 million in annual revenue comprised 60.1%.

Among different sectors, manufacturing made up 22.5% of the responses, followed by professional/technical services at 20.2%, government/nonprofit organizations at 14.5%, financial services at 12.7%, retail/wholesale distribution at 12.1%, utilities at 5.8%, healthcare at 5.8%, and other industries at 6.4%.

Also see

Budget planning, spreadsheet on laptop screen

Image: simpson33, Getty Images/iStockphoto