Digital transformation accelerates as companies ramp up the spend on SaaS and cloud
Flexera, the company that helps organizations maximize business value from their technology investments, announced the findings of the Flexera 2022 Tech Spend Pulse. A part of the Flexera State of series of reports, the Flexera 2022 Tech Spend Pulse provides insight into current and future technology spend from the perspective of enterprise CIOs and IT executives. The report highlights how companies are shifting spending to support their critical IT initiatives, how they’re tracking and managing IT spend, and the challenges they face in optimizing spend. It also evaluates the macroeconomic effects of sanctions on Russia and the conflict in Ukraine.
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Survey respondents are 501 IT executives working in large enterprises with 2,000 or more employees, headquartered in North America and Europe, encompassing industries such as financial services, retail, e-commerce and industrial products. More than two-thirds are vice president or higher, and 80 percent work in IT.
“We hear it every day from our enterprise customers: accelerating digital transformation and optimizing IT spend require a complete view of IT across on-prem, SaaS and cloud,” said Jim Ryan, president and CEO of Flexera. “With the majority of respondents anticipating that IT budgets will grow in the coming year, mapping IT spend to business outcomes is critical. A comprehensive view of your IT estate is essential in order to make decisions quickly and effectively.”
Key highlights from the Flexera 2022 Tech Spend Pulse:
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- Relative spend on IT: Respondents report spending a median of eight percent of revenue on IT. For smaller organizations (2,001 to 5,000 employees) this is higher at 10 percent. For the largest companies (more than 10,000 employees), it drops to six percent.
- Increase in IT spending in 2022: 64 percent of respondents expect to increase IT budgets in the next 12 months. This is up from 49 percent in January of 2021, but down from a high of 71 percent from just before the February 2022 sanctions on Russia began.
- Global pressures drove SaaS and cloud adoption: Over the past few years, COVID-19 drove an increase in the adoption of SaaS (69 percent increase) and cloud (59 percent increase). More than a quarter of respondents (27 percent) said they decreased spending on traditional on-premises software.
- SaaS, public cloud (IaaS/PaaS) lead expected changes in technology investments: After global sanctions began, 72 percent of respondents expect SaaS spending to increase (including 22 percent expecting a significant increase); and 71 percent expect cloud (IaaS/PaaS) to increase (including 44 percent expecting a significant increase).
- Data centers continue a decline: Over the next 24 months, 51 percent of respondents anticipate a reduction in the number of data centers. An additional 10 percent plan to eliminate them completely.
- Digital transformation, security and cloud lead IT spending: Almost three-fourths (74 percent) of respondents name digital transformation as a top technology initiative (up from 56 percent in 2021), followed closely by cybersecurity (73 percent in 2022, up from 50 percent in 2021), and cloud/cloud migration (65 percent in 2022, up from 48 percent in 2021).
- Biggest challenges in making IT-related decisions: The single largest challenge in making IT purchasing decisions was the lack of quality data (82 percent). This is followed by slow implementation decisions (79 percent) and taking too long to make decisions (79 percent).
- Top optimization challenges: The top challenges for optimizing IT costs were manual processes (86 percent), increased prices from vendors (84 percent) and avoiding waste (81 percent).
- Top vendors: Microsoft is the largest vendor for 58 percent of respondents (compared to 47 percent in 2021); Amazon Web Services (AWS) remained the largest vendor of 21 percent of respondents (similar to 22 percent in 2021). Oracle is now the largest vendor for 15 percent of respondents (up from six percent in 2021).
- Microsoft to benefit most from changes in vendor spend: 69 percent of respondents said they expect to increase spend on Microsoft Azure in 2022; 64 percent plan to increase spend on Microsoft SaaS software; and 59 percent plan to increase spend on Microsoft licensed software. In comparison, 57 percent plan to increase spend on AWS.
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