Business IT Trends Annual Report IT budgets remain steady in uncertain times

Transcription

1 2018 Business IT Trends Annual Report IT budgets remain steady in uncertain times

2 2018 Business IT Trends Annual Report Update on IT budgets and tech spending We surveyed businesses of all types and sizes, across the US and Canada, about their technology budgets and spending priorities for Their responses show some uncertainty about the market but investment in IT is continuing, with a strong majority having budgets that are growing or stable, and very few expecting a decline. The 2018 Business IT Trends Annual Report contains responses from 998 individuals in decision-making positions, or in positions to strongly influence their organization s purchasing priorities and choices. These priorities cover hardware and software, cloud services and on-premises installations, and more. Read on to discover just where your colleagues, contemporaries and competitors are planning to invest their technology budgets and see how your plans stack up Business IT Trends Annual Report 2

3 Headlines Business uncertainty is driving modest budget growth: Budgets have largely held steady for 2018, with 37% of respondents saying they ll spend more than last year (compared to 35% in 2017) and only 10% reporting a budget decline. Finance, manufacturing and technical services are driving change: The strongest budget growth is in finance and insurance, followed by manufacturing and professional, scientific and technical services. Competitive pressures are driving small and mid-size companies to invest in IT: By company size, organizations employing from are expecting the most growth. Digital transformation is driving investment in PCs, security and hosted services: The most popular spending categories in hardware are: desktop and laptop PCs; in software: security and backup; and in cloud services: backup and recovery, and application hosting. The business environment is always changing, and companies of all sizes must be ready to adapt. The Harvey Nash/KPMG CIO Survey 2017 showed that nearly two-thirds (64%) of CIOs think the political, business and economic environment is becoming more unpredictable. Key sources of this uncertainty include tensions with North Korea, the unknown impact of Brexit, the commencement of the EU s general data protection regulation (GDPR), instability in the Middle East and the refugee problems it causes, and the possibility of a return to global tariff barriers. Yet despite this uncertainty, local operations are confident that the regional economy is strong and they re continuing to invest, and the forecasts made by analysts at Gartner and IDC last year remain on track. Critically, these included global IT spending trending upwards at 6.2% in 2018, led by Enterprise Software, IT Services, and Devices trends echoed in our own data Business IT Trends Annual Report 3

4 01 How does 2018 expenditure compare to 2017 budgets? 10% 11% 42% 2018 IT budgets overview 37% More than one-third (37%) of respondents plan to spend more on IT than last year; only 11% plan to spend less. Spending increase Spending flat Spending decrease N/A 37 % of 2018 respondents reported plans to increase their expenditure, versus 35% in % Up by 30% or more Up by 20 30% Up by 10 20% Up by 1 10% Flat Down by 1 10% Down by 10 20% Down by 20 30% Down by 30% or more N/A or don t know 6% 3% 3% 2% 3% 2% 9% 11% 19 % 42% of 2018 respondents reported flat budgets, versus 35% in % of 2018 respondents reported reduced budgets (or didn t know), versus 30% in The answer is simple: budgets are holding steady. More than one-third (37%) of respondents are planning to spend more in 2018 than in 2017; nearly half (42%) reported flat spending; and only 10% reported a decline. This accords well with the Harvey Nash/KPMG CIO Survey 2017, which forecast two-thirds of organizations would adapt their technology strategy, necessitating increased or at least steady spending on IT as systems are evaluated and, where necessary, upgraded. Looking more closely at the numbers, we see that in 2018, 9% are planning budget increases of 20% or more (with 6% planning 30% or more). This is an increase over 2017, when just 4% of respondents reported increases of 20% or more (with 3% reporting 50% or more). The other notable data point is that while respondents aren t planning to increase their spending much in 2018 compared to 2017, they re not decreasing it either: 42% report flat budgets in 2018 (compared to 35% in 2017) and fewer respondents didn t know their budget plans: just 11% in 2018, versus 15% in This indicates that there s greater certainty around budgets and the necessity for continued spending on IT. This aligns with IDC s CIO Agenda 2018 prediction that companies are working on infrastructure and application re-platforming, requiring expenditure until 2019 when the projects will be complete Business IT Trends Annual Report 4

5 02 Budget by industry Budget by industry and by company size Increase Maintain Top result 31% 45% 27% 49% 48% 41% 39% 34% 44% 45% 43% 40% 22% 47% 33% 40% Construction Educational services Finance and insurance Healthcare and social assistance Manufacturing Professional, scientific and technical services Real estate and rental and leasing Retail trade Finance (48% of organizations), manufacturing (44% of organizations) and professional services (43% of organizations) lead the way with above-average commitments to increased IT budgets. Manufacturing also sees greater than average flat spending (45% of organizations) and a smaller than average proportion of decreased spending (11%, versus the average of 21%). Real estate (31% of organizations) and retail (27% of organizations) are looking at the largest falls, both being more than five points more than the all-organizations average (21%). Budget by company size 26% 48% 23% 51% 50% 34% 50% 33% 41% 35% 42% 42% One person ,000 Smaller companies (1 20 ) are reining their budgets in; only lower midsize companies (21 50 ) are looking to increase their budget considerably (50% of organizations), while companies 51 and larger are looking at increases closer to the all-organizations average. Larger organizations (251 or more ) are still looking at increases, but almost the same number will simply maintain their budget. This makes sense in the context of IDC s finding that major re-platforming projects are due for completion by the end of calendar 2018: budgets for mid-size and larger organizations are being maintained as these projects wrap Business IT Trends Annual Report 5

6 Where are IT buyers 03 spending money? Areas in which IT budget is being spent Hardware Software Cloud 37% N/A or don t know 33% 23% 7% Spend on hardware, software and cloud 38% 30% 38% 34% 24% 40% 35% 24% 36% 38% 25% 35% 36% 28% 18% Budget $5 20k Budget $20 50k Budget $50 200k Budget $ k Budget $500k+ Digital transformation is the main order of business for organizations of all sizes, whether they call it by that name or not. Thus, we see a remarkable consistency of spending priorities between hardware, software and cloud across organizations at all budget ranges: every category, at every budget range, is within five points of the all-organizations average. One distinguishing factor is that respondents with budgets less than $50,000 are closer to the averages while those with higher budgets varying a little more, perhaps suggesting that they have specific requirements to meet. More broadly, customers are demanding anywhere, anytime, any device access to information and services. New devices and new applications must be accounted for in business strategies, and new online capabilities and services integrated. As Forbes notes, this means businesses now must respond to customer demands (for improved experiences and products), become process oriented (digitizing processes to improve capability and efficiency), and embrace innovation (to create new products and business models). This requires investment across all categories of IT expenditure, which our data clearly reflects Business IT Trends Annual Report 6

7 04 In which hardware categories are IT buyers investing? Desktops/PCs: 18% Laptops: 16% Networking/Wi-Fi: 13% 9% 8% 3% Security: 13% Servers: 11% Storage: 9% Tablets/mobile devices: 9% Printers: 8% N/A or don t know: 3% 9% 11% Hardware investment categories 18% 16% 13% 13% Across all companies, desktops, laptops, networking, security and servers are the top five categories. These represent the building blocks of any modern business, and as noted, companies of all types and sizes are rebuilding themselves as digital enterprises some intentionally and with a clear strategy, others incrementally and almost accidentally, as the normal upgrade cycle introduces them to new capabilities. This matches Gartner s prediction that the main drivers of IT spend will be digital business, blockchain, internet of things (IoT) and the steady progression from big data to algorithms to machine learning to artificial intelligence. These advances require investment in basic IT infrastructure like workstations, networking, security and servers and this is confirmed by our respondents. Interestingly, mobile devices and tablets were a lower priority, but this also accords with Gartner s prediction that phone sales would be largely flat (comprising fewer sales but at higher unit prices) Business IT Trends Annual Report 7

8 05 In which software categories are IT buyers investing? Security: 20% Backup: 17% Servers: 14% 8% 6% Database: 13% 11% 20% Virtualization: 11% N/A or don t know: 11% CRM: 8% Printers: 6% 11% Software investment categories 17% 13% 14% As companies undergo their digital transformations, they are gathering, handling and storing more data than ever before. So, it makes sense that when it comes to software spending, security, backup and servers are the top priorities, followed by databases and virtualization. Breaking the data out by budget, backup is a key requirement across the board. For high budget organizations, CRM and virtualization account for nearly half the anticipated software spend; for low budgets, after backup and security the remaining budget areas take a roughly equal proportion of the spend. Gartner s predictions are again borne out by our data the analyst predicted 9.5% growth in software spend in 2018 (and another 8.4% in 2019), partly thanks to adoption of enterprise applications and growth of software as a service (SaaS) in key segments including finance, human resources and analytics Business IT Trends Annual Report 8

9 06 In which cloud categories are IT buyers investing? Backup & recovery: 19% N/A or don t know: 13% Application hosting: 12% 7% 5% 4% hosting: 12% 8% Security solutions: 10% 19% Web hosting: 10% Productivity: 8% Infrastructure: 7% 10% Cloud investment categories Hosted VoIP: 5% Content filtering: 4% 10% 13% 12% 12% As noted in our comment for the software category, Gartner has predicted an increased spend on SaaS products in key segments including finance, human resources and analytics. This aligns with our top three cloud investment categories (discounting the second-place N/A responses): backup and recovery; application hosting; and hosting. This holds true for low as well as high budget spenders. Cloud services are becoming ubiquitous and their many advantages including financial (e.g. being costed as OpEx rather than CapEx), operational (e.g. rapid scalability) and security (e.g. dedicated expert teams) make them in many cases too good to refuse. Forrester has predicted that cloud services will accelerate digital transformations, and that in 2018 more than half of all global enterprises will rely on at least one public cloud platform. This puts our findings into context companies are moving basic services to the cloud as they embrace its transformative power Business IT Trends Annual Report 9

10 07 Investment category by industry Spend by industry on hardware, software and cloud Hardware Software Cloud 37% 33% 34% 43% 34% 34% 35% 29% 37% 36% 40% 34% 35% 35% 35% 32% 32% 29% 26% 23% 23% 21% 21% 23% 26% 20% 22% All industries Construction Educational services Finance and insurance Healthcare and social assistance When we compare each industry s breakdown to the all-industries average, clear differences in investment priorities emerge. Manufacturing Professional, scientific and technical services Real estate and rental and leasing Retail trade Construction Investing considerably more in hardware than in cloud. Educational services Investing strongly in hardware. Finance and insurance Investing strongly in cloud. Healthcare and social assistance Closely match the average but prioritizing software. Manufacturing Investing strongly in hardware. Professional, scientific and technical services Investing strongly in cloud. Retail trade Close to the average in all categories but spending less on software. These priorities are unsurprising. BusinessWire has predicted IoT spending in manufacturing to grow by nearly 30% through to This is reflected in our data, a strong hardware investment for manufacturing as the industry rolls out sensors and control systems. Similarly, Gartner has noted that finance applications are rapidly shifting to the cloud, and professional services organizations are being rapidly digitized, necessitating a similar shift. Meanwhile Forrester has noted that 67% of retailers will be unprepared to exploit intelligent agents, a curious lag that s also reflected in our data, with its lack of emphasis on software. One finding not reflected in the figures above was that construction, real estate and retail which are closely connected to consumer spending and broadly reflective of confidence in the economy had considerably higher numbers of unsure respondents Business IT Trends Annual Report 10

11 08 Investment category by company size Hardware Software Spend by company size on hardware, software and cloud Cloud 34% 30% 32% 33% 37% 32% 40% 32% 39% 35% 36% 36% 25% 21% 24% 23% 26% 16% One person ,000 The most notable trend here is that while the hardware:software spend ratio is reasonably consistent across all company sizes, cloud spend trends upwards with size. This makes sense: larger organizations are embracing the cloud and its attendant shift of IT spend away from on-premises hardware to hosted services. IDC has forecast continued re-platforming through 2018 for such companies, along with the need for agile processes and a shift toward digital products Business IT Trends Annual Report 11

12 09 What is driving IT investment? Upgrades/refresh cycle: 22% End of life/obsolete product: 20% Growth/additional need: 15% Software/application compatibility: 9% 9% 8% 7% 1% Project need: 9% Budget availability: 9% Fear of cybersecurity attack: 8% End-user need: 7% 9% Top drivers for IT budget spending 22% Other: 1% 9% 15% 20% It s clear that parts replacement upgrades and products reaching end of life is driving the majority of IT spending. As the development cycle for new products becomes shorter, these upgrades are effectively taking the place of more traditional projects, as feature sets and new capabilities expand. It is perhaps curious that security rated so low as a distinct item when it rates so highly as an IT priority (as noted by ZDNet and Harvey Nash/KPMG, among others). But this might be explained by the fact that security features now come as standard on many products indeed, they re becoming selling points rather than being an extra purchase. In the case of cloud services in particular, security is a key selling point, with providers noting that on-premises security is handled by a small IT team with responsibility for their organization s entire infrastructure, whereas cloud providers have dedicated teams of security experts Business IT Trends Annual Report 12

13 10 Future technology Currently use Respondents currently using, or planning to use, various technologies within the next 12 months Planning to use Advanced security IT automation Internet of things (IoT) Infrastructure as a service (IaaS) Software-defined networking (SDN) SDS/Virtual SAN Platform as a service (PaaS) PC as a service (PCaaS) 3D printing Hyperconvergence Virtual reality (VR)/Augmented reality (AR) Artificial intelligence (AI) 0% 10% 20% 30% 40% 50% 60% 70% Security and automation were the two technologies most used, and most planned to be used, by our respondents; VR/AR, and AI were the least. The top priorities were no surprise: organizations of all types and sizes understand the need for security and are looking for ways to use IT to automate workflows and business processes. The low priority given to VR/AR is unsurprising, as the technologies aren t yet mainstream and their business use, outside a few niche industries like tourism and entertainment, aren t clear. This is probably also why AI rated last. It s understood as a technology that will be important in the future, but at present its applications are little appreciated. However, it s making significant inroads in accountancy and legal firms (i.e. finance and insurance, and professional services) Business IT Trends Annual Report 13

14 References Harvey Nash/KPMG CIO Survey 2017 infographic Harvey Nash/KPMG CIO Survey 2017 summary Gartner Says Global IT Spending to Grow 6.2 Percent in 2018 Worldwide IT Spending Forecast to Sustain Growth of More Than 3% Through 2020 Led by Financial Services and Manufacturing Industries, According to IDC IDC Reveals Worldwide CIO Agenda 2018 Predictions Digital Transformation And Innovation In Today s Business World Gartner Says Global IT Spending to Reach $3.7 Trillion in 2018 Predictions 2018: Cloud Computing Accelerates Enterprise Transformation Everywhere Global Internet of Things (IoT) in Manufacturing Market 2017: Rapid Growth & Technological Advancements in Data Analytics - Research and Markets Gartner Says Finance Is Moving to the Cloud Much Faster Than Expected Digital Transformation And Professional Services Firms: Effects, Shifts, And Key Strategic Recommendations Predictions 2018: A Year Of Reckoning Tech budgets 2018: A CXO s guide Benefits of cloud computing security tools for data storage About this survey These survey results are based on an annual global survey conducted by OneAffiniti from December 2017 through February North American businesses responded Business IT Trends Annual Report