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Today at SpiceWorld 2019, Spiceworksannounced its annual 2020 State of IT study examining technology budget shifts and emerging technology trends in organizations across North America and Europe. The findings indicate that as businesses’ revenues and technology budgets grow over the next 12 months, many businesses will deploy cutting-edge technologies to replace outdated infrastructures and to address growing security concerns. Of those surveyed, in 2020, 44 percent of businesses plan to increase their IT budgets, compared to 38 percent in 2019. Organizations that expect IT budget growth next year anticipate an 18 percent increase, on average. Only 8 percent of businesses expect IT budgets to decline in 2020.
Among the businesses increasing IT spend in 2020, aging IT infrastructure and growing security concerns are the biggest drivers of budget growth, but factors vary by company size and location. For example, 25 percent of enterprises surveyed reported that a recent security incident is driving them to increase their 2020 IT budget, compared to only 4 percent of small businesses. Additionally, compared to those in North America, European businesses are more likely to increase IT spending in 2020 due to corporate tax cuts: 15 percent of European businesses said they’re investing in IT and expanding budgets due to corporate tax cuts, compared to only 4 percent in North America.
“Many businesses may have the ability to deploy more cutting-edge technologies as IT budgets grow and it becomes critical to replace outdated hardware, software, and services, such as Windows 7 and Windows Server 2008 R2, both of which reach end of service in January 2020,” said Peter Tsai, senior technology analyst at Spiceworks. “And, as security breaches become more frequent, the findings indicate that many businesses are taking action to address security concerns and transform their technology environments.”
Future tech: Emerging tech adoption accelerating in large enterprises
As IT budgets rise, adoption of emerging technologies often grows in parallel. For example, the survey shows adoption rates of AI technologies are expected to nearly triple, from 15 percent today to 42 percent by 2021, while adoption of hyperconverged infrastructure, edge computing, and serverless computing technologies are expected to double to 46 percent, 43 percent, and 40 percent over the same time period, respectively.
Adoption rates of emerging technologies in large enterprises – organizations with more than 5,000 employees – are up to five times higher than in small businesses with fewer than 100 employees. For example, 31 percent of large enterprises utilize some form of blockchain technology, compared to 6 percent of small businesses. And, over the next two years, large enterprises plan to adopt emerging technologies at a much higher rate. For example, by 2021, 70 percent of large enterprises surveyed plan to use hyperconverged infrastructure and 68 percent plan to use edge computing technologies.
It’s also worth noting that 16 percent of those large enterprises — likely with branch offices located in areas offering early coverage — are already using 5G technology, and adoption rates are expected to quadruple to 66 percent by 2021.
Top IT challenges: Keeping infrastructure up to date will be biggest pain point of 2020
Keeping technology infrastructure up to date is expected to be the biggest IT challenge in 2020. However, some challenges will be more pressing in 2020 than they were in 2019. For example, businesses expect to face bigger challenges when it comes to following the latest security best practices and managing a mix of on-premises infrastructure and cloud-based services.
The top IT challenges in 2020 also vary by company size. Compared to enterprises, small businesses are more likely to face issues following security best practices and maintaining disaster recovery policies. Conversely, enterprises may have more difficulty implementing new technology innovations seamlessly into their environment.
IT budget breakdown: Small businesses allocating more towards hardware
When examining how technology budgets will be allocated in 2020, the findings show that, on average, organizations surveyed plan to spend 33 percent of their IT budgets on hardware, 29 percent on software, 22 percent on hosted/cloud-based services, and 15 percent on managed IT services. Small companies will spend a significantly higher portion of their IT budgets on hardware, but as company sizes grow, businesses are spending less on hardware and more on managed IT services, resulting in a more even distribution of enterprise spend across hardware, software, cloud, and managed services.
Across all company sizes surveyed, budget highlights within each category include:
- In hardware, budget allocations for laptops (17 percent), desktops (17 percent), servers (14 percent), and networking (8 percent) hardware top the list.
- Top software budget allocations include operating systems (13 percent), industry-specific applications (11 percent), productivity suites (10 percent), and virtualization software (10 percent).
- In hosted/cloud-based services, budget allocations for online productivity solutions (14 percent) top the list, followed by online backup/recovery (12 percent) and email hosting (10 percent).
- Top budget allocations in managed IT services include managed hosting (13 percent), managed hardware support (11 percent), and managed storage/backup (11 percent).
The survey was conducted by Spiceworks in July 2019 and included 1,005 business technology buyers from organizations across North Americaand Europe. Respondents represent a variety of company sizes, including small-to-medium-sized businesses and enterprises, in addition to a variety of industries, including manufacturing, healthcare, non-profits, education, government, and finance. For more information and a complete list of survey results, visit https://www.spiceworks.com/marketing/state-of-it/report/.
Spiceworks, part of Ziff Davis B2B, connects the technology industry to help technology buyers and sellers get their jobs done. The company helps people in the world’s businesses to find, adopt, and manage the latest technologies while also helping IT brands build, market, and sell better products and services. For more information, visit http://www.spiceworks.com.