Companies remain bullish on IT spend, unfazed by financial headwinds

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Dive Brief:

  • Nearly nine in 10 companies surveyed for the forthcoming Spiceworks Ziff Davis “2023: State of IT” report are planning for a recession in the next year, according to preliminary findings released Thursday.
  • While half of the nearly 1,500 IT decision makers surveyed saw spending cuts on the horizon, 51% said enterprise IT investments will increase over the next year and only 6% are expecting a decrease.
  • “In the face of uncertainty, investing in IT, investing in modernization and investing in improving technology capabilities really paid off for businesses [during the pandemic],” said Jim Rapoza, VP and principal analyst at Aberdeen Strategy & Research, during a LinkedIn Live webinar on Thursday.

Dive Insight:

A majority of respondents were already expecting a recession when Spiceworks Ziff Davis, a software company that includes the marketing intelligence company Aberdeen Strategy & Research, fielded the survey in June. But the prospect of two consecutive quarters of GDP losses, which have since come to pass, hadn’t dampened enthusiasm for tech spending.

Drawing on lessons learned during pandemic-induced economic contractions, companies plan to grow IT budgets by an average of 21%, while reducing costs elsewhere, according to the preliminary report.

Economic contractions are concerning but not unprecedented.

“When you think of recessions, it can seem scary, but it’s pretty commonplace,” Rapoza said. The US experienced recessions in 1990, 2001, and for 17-straight months beginning in December of 2007. A pandemic-induced recession lasted for only two months in the spring of 2020, according to the National Bureau of Economic Research.

“April, May and June of 2020, that was the Mount Everest of fear, uncertainty and doubt,” said Rapoza.

Yet, companies that invested in IT and followed through with infrastructure upgrades weathered the storm by pivoting to remote work, moving customer service off-site and reaching consumers online.

“It really brought the profile of IT up in those businesses that might have looked at it as sort of like plumbing or maintenance,” Rapoza said. “Now they look at IT as, they kind of saved our bacon in 2020 and 2021.”

The preliminary findings align with Gartner projections that show cloud spend growing by more than 20% into 2023.

Four in 10 respondents surveyed by Spiceworks Ziff Davis found savings in overall IT spending thanks to previous modernization investments. Improved security was cited by 45% of respondents as another key benefit of greater investment, according to Rapoza.

Communicating the business value of IT spend to other stakeholders should be a priority for CIOs and other tech leaders, according to James Anderson, VP analyst at Gartner.

“There’s probably lots of CIOs out of work over the last couple of years that couldn’t articulate the business value of the IT story,” Anderson said.

For many companies that successfully weathered the pandemic, relying on IT is a big part of that story.

“If a hurricane is coming, you don’t get rid of your generator,” Rapoza said. “You buy a better one.”

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