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5 technology spend trends to watch

Emerging technology spend will give way to cloud and productivity software, according to Spiceworks Ziff Davis 2021 State of IT report.


The pivot to remote work and the financial pressures in the pandemic made value the keyword for enterprise technology, altering how executives gauge return on investment. After crisis mode subsided, shrinking budgets needed to stretch further.


Tech spend is "so important for business continuity and business operations that they've become a mission-critical part of the budget" even in the context of future financial downturns, said Robin Peto, director of research strategy at Spiceworks Ziff Davis.


Emerging tech spend to slip as CIOs focus on core technologies

Emerging technology spend is set to contract year over year, according to the report. Though adoption rates are set to rise compared to 2019, data from Spiceworks Ziff Davis shows investments in emerging technologies will contract next year.


"It's telling me that companies are taking a step back from experimentation and maybe some of the more emerging technologies," Peto said. IT leaders' reliance on computing, serverless computing and VR will take "a bit of a step back to free up the funds so they can invest in the core."


One example of the slowdown is IT automation. In 2020's report, 70% of surveyed leaders said they either implemented IT automation or planned to implement it in the next two years. For 2021, just 61% can say the same.


By contrast, pockets of emerging tech are withstanding the downturn. Large organizations are set to triple existing RPA portfolios, according to Gartner. Nine in 10 large organizations will deploy some form of RPA by 2022, according to the firm's projections


As IT spend forecasts for 2020 retreat, cloud arises as a priority with CIOs seeking more agility in operations, Gartner found.


Emerging tech spend to slip as CIOs focus on core technologies

Emerging technology spend is set to contract year over year, according to the report. Though adoption rates are set to rise compared to 2019, data from Spiceworks Ziff Davis shows investments in emerging technologies will contract next year.

"It's telling me that companies are taking a step back from experimentation and maybe some of the more emerging technologies," Peto said. IT leaders' reliance on computing, serverless computing and VR will take "a bit of a step back to free up the funds so they can invest in the core."


One example of the slowdown is IT automation. In 2020's report, 70% of surveyed leaders said they either implemented IT automation or planned to implement it in the next two years. For 2021, just 61% can say the same.


By contrast, pockets of emerging tech are withstanding the downturn. Large organizations are set to triple existing RPA portfolios, according to Gartner. Nine in 10 large organizations will deploy some form of RPA by 2022, according to the firm's projections


As IT spend forecasts for 2020 retreat, cloud arises as a priority with CIOs seeking more agility in operations, Gartner found.


Cybersecurity is one area where AI applications are set to rise. Security technologies powered by AI or machine learning are set to grow, from 30% of IT leaders saying they had implemented or planned implementation in 2019, to 38% next year, according to Peter Tsai, senior technology analyst at Spiceworks Ziff Davis.

Hardware spend continues to slide

Hardware budgets as a percentage of total IT budgets dropped from 35% of the overall IT budget in 2019 to 31% in 2021, the report finds.

A number of factors may be playing into 2021's projected contraction, according to Tsai:

  • The end of Windows 7 support in January might have led businesses to refresh equipment beforehand, with devices that can now last another five or six years.

  • The work from home pivot around March led businesses to acquire more laptops, leaving some businesses fully stocked up for next year.

  • With a distributed workforce, reliance on on-premise solutions became unviable, with server upgrade spend pushing into cloud expansions.

Despite the decline, security hardware spend is one category set for growth, accounting for 7% of hardware spend in 2021, up from 5% in 2019. Among companies with 1,000 or more employees, this category will make up 9% of hardware budgets.


Cloud moves from backups to operation

In the not-so-distant past, businesses looked at the cloud as an ideal place for online backup and recovery solutions. Now, and in the coming years, the perspective on cloud is more akin to a critical element in workflows, Peto said. 


"Productivity solutions are a huge part of that," Peto said. "They're supporting a remote workforce, but it needs to extend into email hosting, web hosting and industry specific applications."


Even if the effects of the pandemic and the associated financial consequences ease, analysts expect interest in cloud migration to continue. Increased efficiency and agility pushed whatever organizations lagged into migrating — a move that for some organizations led to overspending.


Going forward, there will be more data being stored in the cloud, and more referencing of that data, than perhaps may have been in the past, Peto said.


Budget allocations now match transformation trends

A focus on cloud-based technologies and a hardware contraction "might have been mostly talk for a long time" when it came to percentage of budget allocations, but now the data confirms these intentions, according to Tsai.


"We actually see it happen clear as day in the data whereas before, we were only talking about it, but we didn't really see it motion" as a percentage of overall IT budgets," Tsai said.

The "hosted/cloud services" category in the report will account for one-quarter of IT spending in 2021, up from 21% in 2019. Managed services spend will account for 16% of spend, up from 14% in 2019.


Behind the trend is an executive desire to leverage the cloud and other technologies to improve IT operations and systems performance, an imperative for 36% of IT leaders. Another 44% say they've accelerated or plan to accelerate digital transformation.


Let us assist in your 2021 planning process by conducting a free strategy assessment review with our client, Speridian Technologies, and M. Allen. Please send us an email requesting the free assessment to mslonaker@mattallendevelopment.com. We will get back to within four hours to schedule the strategy review.




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