IT Budgets 2016: All the Data We Have

When you really get down to it, what factors directly affect IT’s budget? Might there be some areas you have overlooked? In a lengthy analysis at ZDNet, Charles McLellan breaks down all the aspects of IT’s budget, especially examining the findings of various surveys, in order to determine where real impacts are made.

The two prominent influences over IT spending are the economic climate and the industry sector involved. It is estimated that total worldwide IT spending will be approximately $2.69 trillion this year, a decline of 3.5 percent from the previous year. This can be attributed to the strength of the US dollar and slowdowns in other prominent markets (China, Brazil, and Russia).

IT Stats Across the Spectrum

Market research firm Computer Economics’ annual spending and benchmarking report adds more to the discussion. Among their findings, over two-thirds of IT organizations are increasing their operational IT budget, with a median growth of three percent. However, when it comes to capital spending, the investments remain pretty much the same. This stagnation could be the result of two different things: IT budgets lagging behind revenue growth, or the movement towards a more cloud-centric business.

Spiceworks, an IT professional network, published its own annual report and included survey results from over 800 IT professionals. Despite IT pros expecting their company revenues to increase over the next year, IT budget increases are not expected. The majority of IT spending will be on hardware and software projects. It is also interesting to note that although 59 percent of IT pros believe that their organization does not adequately invest in IT security, they only have plans to spend 9 percent of their software budget—six percent of their total budget—on security measures.

Tech Pro Research published their survey of a 201 IT professionals. The key findings include: year-to-year IT budgets remain stagnant, IT budget creation begins with IT middle managers, outside IT consultants offer better recommendations for the proper technologies for the organization to adopt, more companies are seeking to in-source rather than outsource, and the top IT project focuses for 2016 are security, governance, and networks.

More Oversight Is Needed

Rather than old-school Excel, there is a movement to utilize technology business management software to manage IT budgets. This program allows for CIOs to “run IT like a business.” The program uses information to gain transparency about IT costs, which allows for better decisions to be made. IT is losing its budget or remaining the same, but the department is being asked to do more.

In a study done by Apptio, it was found that 44 percent of typical IT spending is spent on people-related costs. Apptio’s customer database relies on the division of companies into three groups: technology-centric, vendor-centric, and people-centric. Technology-centric organizations focus their spending on hardware and software, vendor-centric focus spending on outside services, and people-centric focus on internal labor.

In conclusion, McLellan finds that with 2016 rapidly approaching, CIOs are going to be asked to do more with the same or less money (what a shock). He says they need to focus on in-house infrastructures while upgrading current systems. Excel will no longer suffice and a more formalized program is going to need to be utilized.

You can read the full analysis here:

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