IT Operational Spending to Rise 3.0% in 2015

November, 2014

As IT executives look ahead to 2015, they see a business climate that is improving and sustainable—if not stellar—growth. Our forecast for 2015 is not entirely bullish, but it shows conviction.

IT operational spending should increase 3.0% at the median in the U.S. and Canada, as shown in Figure 6 from our study, IT Spending and Staff Outlook for 2015. While somewhat modest by historical standards, the growth rate is in line with the gradual, steady improvement since 2011.

Outlook 2015 Fig 6 - IT Operational Spending to Rise 3.0% in 2015

Moreover, in a low-inflation, slow-growth environment, our survey results provide evidence that business leaders recognize the value in IT. “Our annual outlook survey indicates organizations are willing to invest in transformational technologies and are more concerned about improving service levels than reducing costs,” said John Longwell, vice president of research for Computer Economics, Irvine, Calif.

The study also finds that a majority of IT organizations plan to increase IT staff headcount. However, capital spending on data center and network infrastructure will remain lackluster.

Our top-line forecasts for 2015:

  • IT operational budgets will rise 3.0% at the median. Cloud computing providers will be the primary beneficiaries, along with job seekers.
  • IT capital budgets will remain flat, showing little or no growth at the median. IT organizations will continue to invest in enterprise applications, security, and business intelligence. Spending on data center infrastructure will remain weak.
  • More than half of IT organizations will increase IT staff headcount. We also will see a shift from the use of contractors to the hiring of more full-time, regular employees.
  • The typical IT worker will receive a 3.0% pay raise, and IT organizations will need to pay greater attention to recruitment, training, and retention activities.

The outlook for 2015 is mostly positive. There are innovations in mobility, business intelligence, and cloud computing that are enabling businesses to derive transformational value from their IT investments. At the same time, IT spending faces real constraints in the slow-growth environment, and IT executives will need to grapple with finding resources to maintain existing infrastructure while investing in transformational technology. That will be an ongoing challenge for many years ahead.

This annual report provides guidance for IT executives as they firm up spending plans for the coming year. The report is based on our survey of 128 IT organizations worldwide, including 68 IT organizations in North America. The study assesses IT spending plans for 2015, priorities for IT spending and investment, and plans for hiring, outsourcing, and use of contractors and part-time workers. We also look at the forecast for pay raises for IT workers.

This Research Byte is a brief overview of our report on this subject, IT Spending and Staffing Outlook for 2015. The full report is available at no charge for Computer Economics clients, or it may be purchased by non-clients directly from our website (click for pricing).