CIOs Share Insights into Their Tech Budgets
Thinking about your monthly personal budget, it’s pretty common for bumps to come along in the road or even unexpected savings that cause your spending habits to shift. The same is true for business budgets and we have insider information to share. CIO’s 2018 Tech Poll: Economic Outlook research dives into the ebb and flow of tech spending patterns. This years’ results found that organizations have an average technology budget of $121 million, and this is expected to increase in the 12 months for the majority of organizations (57%). Additionally, 30% of IT executives expect their budget to remain the same and 10% assume their budget will decrease.
So which business factors are causing these shifts? When looking at past budget shifts, IT executives report they have been due to IT initiative/project start and stops, system upgrades/maintenance, and the changes in the number of IT initiatives starting in a given year. But changes are not necessarily a bad thing. These are also the top reasons why past budgets have increased. When it comes to budget decreases, IT executives report that the main reason in the past was because of new mandates from executive management/the Board of Directors (41%), followed by IT initiative/project start and stops (38%).
When thinking about the future, IT executives are ready to be agile with their spending and priorities. In particular, they are again ready for budget shifts due to IT initiative/project start and stops, however new mandates from executive management/BoD, system upgrades/maintenance, and pressure from LOB to make changes to IT operations or strategy also come into play. Again, these factors remain the same for expected budget increases; however, differ for expected budget decreases. Expected causes of future budget decreases include new mandates from executives/BoD, new pricing models, pressure from LOB to make changes to IT operations or strategy, and newly negotiated vendor contracts.
Ultimately, tech budgets are created with one goal in mind – the success of the organization. In today’s competitive business environment, success often means staying ahead of your competitors and creating the next best thing for your customers. This is where organizations turn to digital transformation. Organizations are actively enhancing their IT strategies, operations and solutions; all of which result in a shift in tech spending. Compare this to a home renovation – when you initially begin planning your updates, budgets become tighter and spending may decrease. Once it’s time for the project to start, your habits shift and spending increases, which is a similar process for organizations transferring to a digital business. Since they are actively updating their technologies, work spaces, etc., this can become a fairly cyclical pattern, which is what we see in the 2018 CIO-focused research. Learn more about tech budget patterns by viewing the research sample slides.