IT budgets will increase in 2023 despite inflation, fears of recession • The Register

Despite fears of a recession, most companies plan to increase IT budgets in the coming year.

Spiceworks Ziff Davis (SWZD) concluded this in its article Report on the status of IT 2023, from today. Of the nearly 1,000 IT buyers surveyed, 83 percent said they were concerned about how a recession in 2023 could affect their business. Despite this, just over half said they would increase their IT spending in 2023, while just 6 percent said they would reduce their IT budget.

Peter Tsai, senior technology analyst at SWZD, said during a news conference that he was surprised when some of the data was cross-referenced: Among companies preparing to cut their overall business spending in 2023, 68 percent still plan to cut their spending increase IT budgets.

IT: Finally a priority?

About 40 percent of these budget increases will be due to inflation, although respondents said price increases played only a minor role, the report says.

Instead, IT budgets are planned primarily around the need to replace outdated hardware, an increased priority for IT projects, staff growth, and security concerns. It all suggests the business community had an epiphany in the early days of the COVID-19 pandemic, according to Jim Rapoza, VP and senior analyst at SWZD subsidiary Aberdeen Strategy and Research.

“Companies that invested in technology during the pandemic saw significant benefits. Our research found improvements in performance, reliability, security, and even reduced total IT costs for organizations that modernized their infrastructure — even if it was initially out of necessity,” said Rapoza.

The lessons learned in the early days of the pandemic are still fresh in the minds of many executives, Rapoza added, saying those who chose to invest in IT modernization and infrastructure not only survived the pandemic — many were been successful. Because of this, these leaders now see IT investments and agility as key elements of planning for the future.

But that doesn’t mean the areas of IT investment will stay the same for the year ahead. As many businesses return to the office, spending on cloud services is expected to decrease, while spending on managed services is likely to increase. Much of the reason for this shift is the “right sizing” that companies will make to “support their employees where it makes the most sense” (i.e., in the office or remotely), the report states.

As much of IT growth in recent years has focused on adding services needed to support employees working remotely, managed services will continue to be part of the IT budget.

“Having spent the last few years modernizing, many are now likely to turn to services to help them maintain their new technology stacks,” the report said.

Nobody wants another March 2020

The general tone of the 2023 predictions is optimistic, and a lot of that hinges on the idea that, as Jeff Grettler, global director of IT at SWZD, said, “pandemic disruption has directly scared people.”

“That was the ultimate disaster recovery scenario,” Grettler replied to questions from The registry. He said that while many companies have managed to get things up and running, they didn’t necessarily want to end up in the same place where a disaster — or another wave of COVID-19 — will require a rapid change in business operations.

“Fear is a powerful ally,” Grettler said.

Ultimately, the report concludes, in 2020 the business world has learned a lesson about agility and, by extension, prioritizing IT spending. IT departments may have suffered then, but if SWZD’s predictions come true, that won’t be the case in the future.

Conclusion: The COVID-19 pandemic “transform[ed] how decision-makers think about and ultimately evaluate technology in the workplace,” it says. ®

https://www.theregister.com/2022/09/27/it_budgets_2023_inflation_recession/ IT budgets will increase in 2023 despite inflation, fears of recession • The Register

Laura Coffey

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