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Spiceworks 2020 State of IT Reveals Industry Shifts and Emerging Trends Driving IT Budget Increases
Spiceworks started its final day of SpiceWorld 2019 by announcing its annual 2020 State of IT study. The study compiled information from organizations across North America and Europe and looked into changes in technology budget and upcoming technology trends.

The 2020 State of IT revealed the need to upgrade outdated IT infrastructure, followed by increasing security concerns, are the biggest drivers for next year's IT budget increases. Of those surveyed, in 2020, 44 percent of businesses plan to increase their IT budgets, compared to 38 percent in 2019. Organizations that expect IT budget growth next year anticipate an 18 percent increase, on average. Only 8 percent of businesses expect IT budgets to decline in 2020. 

Although the businesses surveyed revealed the two main driving forces behind the need to increase budgets, factors vary by company size and location. For example, 25 percent of enterprises surveyed reported that a recent security incident is driving them to increase their 2020 IT budget, compared to only 4 percent of small businesses. Additionally, compared to those in North America, European businesses are more likely to increase IT spending in 2020 due to corporate tax cuts: 15 percent of European businesses said they're investing in IT and expanding budgets due to corporate tax cuts, compared to only 4 percent in North America. 

"Many businesses may have the ability to deploy more cutting-edge technologies as IT budgets grow and it becomes critical to replace outdated hardware, software, and services, such as Windows 7 and Windows Server 2008 R2, both of which reach end of service in January 2020," said Peter Tsai, senior technology analyst at Spiceworks. "And, as security breaches become more frequent, the findings indicate that many businesses are taking action to address security concerns and transform their technology environments."  

Emerging tech and large enterprises 

Increases in IT budgets also lead to the adoption of emerging technologies. For example, the survey shows adoption rates of AI technologies are expected to nearly triple, from 15 percent today to 42 percent by 2021, while adoption of hyperconverged infrastructure, edge computing, and serverless computing technologies are expected to double to 46 percent, 43 percent, and 40 percent over the same time period, respectively.

Adoption rates of emerging technologies in large enterprises - organizations with more than 5,000 employees - are up to five times higher than in small businesses with fewer than 100 employees, likely due to better funding and greater resources. For example, 31 percent of large enterprises utilize some form of blockchain technology, compared to 6 percent of small businesses. And, over the next two years, large enterprises plan to adopt emerging technologies at a much higher rate. For example, by 2021, 70 percent of large enterprises surveyed plan to use hyperconverged infrastructure and 68 percent plan to use edge computing technologies. Additionally, 16 percent of those large enterprises are already using 5G technology, with adoption rates expected to quadruple to 66 percent by 2021.

Balancing the Budget: Keeping infrastructure up to date amid growing security concerns

Keeping technology infrastructure up to date is expected to be the biggest IT challenge in 2020, followed closely by addressing rising security concerns. Businesses expect to face bigger challenges when it comes to following the latest security best practices and managing a mix of on-premises infrastructure and cloud-based services. 

Compared to enterprises, small businesses are more likely to face issues following security best practices and maintaining disaster recovery policies, while enterprises may have more difficulty implementing new technology innovations seamlessly into their environment.

Hardware and IT budgets for smaller businesses

The 2020 State of IT also reveals that on average, organizations surveyed plan to spend 33 percent of their IT budgets on hardware, 29 percent on software, 22 percent on hosted/cloud-based services, and 15 percent on managed IT services. Small companies will spend a significantly higher portion of their IT budgets on hardware, but as company sizes grow, businesses are spending less on hardware and more on managed IT services, resulting in a more even distribution of enterprise spend across hardware, software, cloud, and managed services.

Across all company sizes surveyed, budget highlights within each category include:

  • In hardware, budget allocations for laptops (17 percent), desktops (17 percent), servers (14 percent), and networking (8 percent) hardware top the list. 
  • Top software budget allocations include operating systems (13 percent), industry-specific applications (11 percent), productivity suites (10 percent), and virtualization software (10 percent). 
  • In hosted/cloud-based services, budget allocations for online productivity solutions (14 percent) top the list, followed by online backup/recovery (12 percent) and email hosting (10 percent). 
  • Top budget allocations in managed IT services include managed hosting (13 percent), managed hardware support (11 percent), and managed storage/backup (11 percent). 
With 44 percent of businesses planning to increase their IT budgets in 2020 by an average of 18 percent year over year, the emergence of cutting-edge technologies in the workplace will grow in parallel. Additional increases in security budgets reflect a response to managing growing security concerns. The trends and budget increases highlighted in the Spiceworks 2020 State of IT give technology vendors and service providers the ability to help businesses identify the solutions that best meet their unique needs, reaching out to the right buyers at the right time.
Published Wednesday, September 25, 2019 1:00 PM by David Marshall
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