Cloud Transition Reins in IT Budgets Worldwide

January, 2018

For the third straight year, IT organizations worldwide are keeping tight control over their IT budgets, with companies in the U.S. and Canada particularly choosing to restrain spending. Rather than a sign of economic uncertainty, much of the reason for the slow budget growth is the cloud transition. Cloud computing allows IT organizations to be more productive without corresponding increases in IT staff or infrastructure. Companies are using the cost savings to fuel new initiatives without having to increase IT budgets.

This year, for the first time, our outlook for IT spending and staffing in the new year goes beyond the U.S. and Canada to also report the outlook for the rest of the world. Figure 6 from the full study, Worldwide IT Spending and Staffing Outlook for 2018, shows the expected median IT operational budget growth for the worldwide sample, as well as the regions covered in the study. Asia/Pacific organizations will see the largest budget growth, not only because of positive expected economic growth, but also in part because they are not as far along as other world regions with the cloud transition.

Outlook2018 fig 6 - Cloud Transition Reins in IT Budgets Worldwide

“Typically, before the cloud transition, companies would grow IT budgets roughly to match expected revenue growth,” said David Wagner, vice president of research for the Irvine, Calif.-based research firm Computer Economics. “This is no longer true in regions of higher cloud adoption, such as the U.S. and Canada, where IT budgets are not keeping pace with revenue growth.”

A look at where organizations plan to spend their new dollars provides more insight into current trends. A net 54.7% of IT organizations plan to increase spending on business applications, while a net 21.2% are increasing spending on network infrastructure.

Meanwhile, more companies are planning to decrease spending on data center infrastructure than plan to increase it. A net of 2.2% plan to decrease data center spending. When we isolate the U.S. and Canada, a net of 17.1% of companies plan to decrease data center infrastructure spending, further highlighting the cloud transition in this region.

In our annual outlook study, we provide guidance for IT executives as they firm up their plans for the coming year. This year, our report assesses IT operational and capital spending plans for 2018, priorities for IT spending and investment, and plans for hiring, outsourcing, and pay raises for IT organizations throughout the world.

This Research Byte is a brief overview of our study, Worldwide IT Spending and Staffing Outlook 2018. The full report is available at no charge for Computer Economics client or may be purchased directly from our website (click for pricing).