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IT Executives Balancing Tech Budgets Between Business Necessities and Innovation

2018 CIO Tech Poll: Economic Outlook research provides insight into the business factors impacting tech spending and growth

IDG’s CIO—the executive-level tech media brand providing insight into business technology leadership—released the 2018 CIO Tech Poll: Economic Outlook research highlighting tech spending patterns (Click to Tweet). This year’s survey of 240 heads of IT confirms that organizations are receptive to adopting new technologies and are continuing to expand their IT budgets. The average total annual tech budget is $121 million, and when asked how their tech budget is expected to change in the next 12 months, 57% of respondents anticipate a budget increase.

This year the research provided more specific insights into the solutions that organizations are allocating their IT budgets towards. On average, 66% of IT budgets are dedicated to solutions that maintain the current business. These include tools that run the business such as administrative initiatives, operational activities and inventory replacement. Nearly a third (31%) of tech budgets are focused on growth and innovation – think machine learning, artificial intelligence (AI) and the Internet of Things (IoT). Some organizations are more focused on what’s next as 16% of respondents say at least half of their IT budget is allocated towards growth and innovation.

Read More: Insurtech: the new AI disruption is hitting insurance

Throughout a fiscal year, it is common for priorities to shift and budgets to be redirected. The majority of respondents said that their past budget shifts occurred due to IT initiatives/projects starting and stopping (47%), system upgrades/maintenance (43%) and a change in the number of IT initiatives starting in given year (40%). Future budget changes are expected to be driven by new mandates from executive management, and pressure from line of business to make changes to IT operations or strategy.

Technology Budget Ownership 

Adam Dennison
Adam Dennison
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As organizations become more invested in innovative technologies, the research explores who is primarily responsible for driving investment in six specific technologies: AI, cloud, data & analytics, IoT, machine learning and mobility. Within this mix of emerging and established tools IT holds primary responsibility in all these areas, especially when it comes to cloud computing (76%). While the IT department leads tech investment, they collaborate with colleagues in various departments on new technologies. With departments throughout the organization needing tech enhancements, operations (50%), marketing (47%) and engineering (38%) are all expected to experience an increase in their budgets dedicated to technology within the next 12 months.

“Technology solutions continue to evolve as digital transformation creates opportunity for new and revamped products,” said Adam Dennison, SVP/publisher, CIO. “Organizations see the value tech enhancements bring to their business and tech executives are not slow to reevaluate their plans and align their best practices with these next best tools. IT executives are consistently increasing their tech budgets to research key technologies and expand their solutions at the best interest of their organization’s success.”

Read More: Interview with Akemi Tsunagawa, Founder and CEO, Bespoke Inc

New Tools & Global Trends Influence Investments 

Given its recent hype and exploration of use cases, this year’s CIO Tech Poll: Economic Outlook had a focus on blockchain. The results found that 40% of heads of IT view blockchain as an opportunity, which aligns with the 64% of heads of IT that report to have plans to use blockchain technology. When looking by geographic region, North American respondents are further along on their blockchain initiatives as 46% are actively researching the tool compared to 32% of non-North American respondents.

DevOps is another technology that is on the radar for many organizations. Eighty-percent of respondents report that their organization either has DevOps in place, is planning to adopt, or is currently evaluating it. However, the majority (54%) say they already use DevOps in some part of the business today.

This interest in new solutions could easily be put on the back burner if economic events shift priorities. When asked how future events and trends are expected to impact their organization’s tech investment plans, heads of IT continue to see the threat of major information security breaches as a concern (83%), followed by the newly established GDPR regulations (62%). This slightly differs by region, as 46% of North American respondents expect GDPR compliance to have no impact on their investment plans versus only 30% of non-North American respondents. More than half (54%) of organizations say that global trade policies will also impact their tech investments. There is a strong regional difference here as well, as 47% of North American respondents say these policies will impact their IT investments compared to 61% of non-North American respondents.

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