European IT Budgets Rising Despite Pandemic

December, 2020

In our first annual IT Spending and Staffing Benchmarks study focused entirely on Europe, organizations are poised for strong IT operational budget growth despite contending with a global pandemic. Budget increases are set to be well above inflation. European companies across nearly every sector are planning controlled-but-steady IT growth. The outlook for the year is looking strong for IT organizations, even with the coronavirus pandemic—or perhaps, because of it.

As shown in Figure 1-1 from the free executive summary, our European respondents are showing increases in their IT operational budgets of 2.0% at the median, compared to 3.0% for our U.S. and Canadian sample from earlier in the year. When accounting for inflation in the two regions (there is actually slight deflation in the euro area brought on by the pandemic), the IT spending increases are similar. Any difference can mostly be explained by the timing of the two surveys rather than a more conservative outlook in Europe.

The Computer Economics IT Spending and Staffing Benchmarks study, now in its 31st year of publication, provides key metrics to assist organizations in the financial and strategic management of information technology. For the first time, to provide greater insight into regional variations in IT spending and staffing levels, we are adding an annual companion study, focusing solely on organizations in Europe.

ISSEurope2020 21Fig1RB 1030x687 - European IT Budgets Rising Despite Pandemic

At the time of publishing this study, unemployment in the euro area is at 8.1%. Many parts of the economy are only partially open, with a percentage of the population being asked to stay at home, except for essential business. Some parts of the European economy have reopened, and people are returning to work, but other areas are being closed again. News of upcoming vaccines is encouraging, but relief is still months away.

If the economy is struggling, then why are IT budgets on the rise? The pandemic and the subsequent recession have only accelerated existing trends toward digital transformation. IT departments are scrambling to meet the needs of the new economy, whether it is enabling more employees to work from home, improving remote customer relationships, or strengthening the backend to meet these new challenges. IT organizations all over the world are also facing security issues from a changing perimeter. In short, most organizations see increased IT spending as a strategic imperative to weather the current economic environment.

“If a vaccine is the cure for the pandemic, then IT is the cure for the recession brought on by the pandemic,” said David Wagner, senior research director at Computer Economics, a service of Avasant Research, based in Los Angeles. “Companies are building new business models overnight out of sheer necessity. And IT is driving this transformation, both on the customer-facing side and on the back end.”

Digital transformation is accelerating for nearly all organizations. Organizations that can afford to do so are spending more to quicken that pace. Even with vaccines, and an improving economy that will potentially come with them, we would expect this to continue. We expect strong IT operational spending growth to persist well into the next few years.

The Computer Economics European IT Spending and Staffing Benchmarks 2020/2021 study is based on a detailed survey of more than 143 IT executives in Europe on their IT spending and staffing plans for 2020/2021. It provides IT spending and staffing benchmarks for small, midsize, and large organizations and for five sectors and subsectors. 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, European IT Spending and Staffing Benchmarks 2020/2021Individual chapters may be purchased directly from our website (click for pricing).