Many of the top line IT spending and staffing metrics, including IT spending as a percentage of revenue, IT budget increases, the percentage of CIOs reporting adequate budgets, the number of CIOs being asked to cut budgets, and IT staff hiring, may look roughly the same as they have been for much of the last decade. On the surface, it is easy to say that this is another ho-hum, predictable year for IT departments. But a deeper dive shows significant transformation that’s underway.
As shown in Figure 1-1 from the free executive summary of our IT Spending and Staffing Benchmarks 2025/2026 study, IT operational budgets are increasing by 3.0% at the median. This is the second consecutive year, and the fourth year out of the last six that IT budgets have increased by 3.0%. In fact, over the last decade, IT spending has increased at the median by between 2.8% and 3.1% every year, except for the high inflation years of 2022 and 2023.
There is a pattern here that is outlasting major global macroeconomic realities. This pattern pre-dates the COVID-19 pandemic, the major conflicts in Ukraine and around the world, and extends through tariff threats and global trade wars, the explosive growth of generative AI, and countless other changes. For about a decade, companies have increased their IT spending by about 3.0% every year, regardless of the state of the economy or the political atmosphere. And for the most part, CIOs have reported in those same periods that they are “OK” with that budget and that it was roughly adequate to suit their needs.
While important, these top-line metrics are only a snapshot of a single year. Looking back through the last decade, there has not been major movement in some of the key indicators, but there are definitely tectonic shifts in the IT organization. Ten years ago, personnel made up 40.9% of the budget on average. Today, that number is 30.8%. Ten years ago, security made up 1.5% of the total IT budget, the same amount as printers. Today, security is 5.4% of the budget. Artificial intelligence made up such a small percentage of the budget in 2016 that we did not track it. This year, we began tracking it as a separate line item. It already makes up 1.9% of the budget on average, more than security did a decade ago.
“CIOs have spent the last decade re-imagining the IT department and that transformation continues at a remarkable pace,” said David Wagner, senior research director at Avasant. “As AI and automation continue to transform the business, CIOs need to be ready to move even faster.”
With this continued transformation in mind, AI and data analytics are, not surprisingly, the top priorities in new investment. To determine these priorities, we subtract the number of companies reducing their budget in a given area from the number of companies increasing their budget. Only 3% of companies are cutting their data analytics budgets, with 68% increasing them, for a net of 65%. A net of around 64% of companies are increasing their IT spend on AI. Around 9% have not invested in AI at all. Those companies risk falling behind.
In another sign of how important transformation is becoming to businesses, budgets for upgrading legacy systems are increasing by a net of 57% this year compared to only 15% last year.
Will we see the pattern repeat again next year? Of course, no trend goes on forever, but it is likely it will be very much in that ballpark. But, as they say, “the devil is in the details.” IT departments have transformed themselves in the last decade, and AI promises to continue driving that deep transformation. To understand those details, we invite you to explore our study, which for the first time exceeds 50 industry sectors and sub-sectors.
Avasant’s Computer Economics IT Spending and Staffing Benchmarks 2025/2026 study is based on a detailed survey of more than 750 IT executives in the US and Canada on their IT spending and staffing plans. The study provides IT spending and staffing benchmarks for small, midsize, large, and very large organizations and for 47 industry sectors and subsectors. These include six new sectors and subsectors, namely telecommunications, paper and packaging, building materials, investment banking and wealth management, construction and general contracting, and trade services. A description of the study’s metrics, design, demographics, and methodology can be found in the free executive summary.
This Research Byte is a brief overview of the findings in our report, IT Spending and Staffing Benchmarks 2025/2026. The full reports are available at no charge for Avasant Research clients.