Report: Economic woes mean tightening IT budget belts for 2017, says Spiceworks

It seems odd to conflate the economy and politics with IT, but Spiceworks' 2017 State of IT report shows tech decision makers are doing just that. Here's how it might affect your coming year.

Budgets: the last thing any IT professional wants to think about. We're just about at the end of the fiscal year though, so it's time to start thinking about 2017. IT networking company Spiceworks has been polling tech decision makers and professionals to find out what they see coming in the next 12 months.

One surprising fact--which is likely to depress department heads and team leaders--is that IT budgets are expected to stay flat despite increases in company profits. Couple that with an increase in workload without a proportionate increase in team size and you have a recipe for a difficult year.

How politics and the economy affect IT

Purchasing of any kind comes down to consumer confidence, and companies are just large-scale consumers of technology. Economic uncertainty is having an impact on organizational purchasing confidence according to a third of IT professionals: They believe their companies are hesitant to invest in hardware, services, and staff for that very reason.

SEE: Year-round IT budget template (Tech Pro Research)

That lack of confidence is flatlining IT budgets across the globe except for in the UK, where they're predicted to decrease by five percent. Brexit has been a major complication for businesses that are worried about the short- and long-term impacts on profitability, and IT is an area they believe they can trim.

That budget decrease doesn't mean the workload will shrink, though: 59 percent of respondents think their team size will stay the same, putting more strain on fewer people.

What's being done with the money that's left?

Purchasing will still be happening in 2017, of course, and much of it will be going toward replacing tech that has reached the end of its life: 70 percent of IT professionals cited EOL as the number one reason for purchasing new equipment.

SEE: IT budgeting: The smart person's guide (TechRepublic)

Much of the equipment likely to be replaced in 2017 are machines running Windows XP and Microsoft Server 2003: over 50 percent of machines that Spiceworks collects data on are running those sorely outdated OSes.

That figure makes sense when paired with the nearly 60 percent of respondents who don't think their organization is doing enough in regards to security. Over three quarters of IT professionals believe security is the most important area to invest in during the coming year, but only 21 percent plan to invest in advanced security solutions in that timeframe.

Other budget highlights found in the report include:

  • The allocation for hardware, software, and managed services have all shrunk despite these three categories being fundamental to IT departments. Cloud hosting budgets, however, are increasing by an average of three percent.
  • 35 percent is allocated for hardware, with 18 percent of that on desktops, 16 on laptops, and 17 on servers.
  • 29 percent is going toward software, with 13 percent of that being spent on upgrading operating systems.
  • The majority of cloud hosting budget will be spent on email (19 percent), followed by online backup and recovery (14 percent).

The 3 big takeaways for TechRepublic readers

  1. IT budgets in 2017 will remain stagnant and are estimated to shrink by five percent in the UK. IT professionals cite economic and political uncertainty as the cause.
  2. Tech decision makers don't think their teams will increase in size, but the demand on them will, causing more stress and strain in the coming year.
  3. Hardware, software, and managed service budgets are shrinking as the cloud becomes more reliable. Expect the trend to continue as network speeds increase, virtualization becomes the norm, and XaaS keeps trending upward.

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