Study: IT Budgets Surge Despite Choppy Economic Waters


While IT budgets have experienced numerous difficulties lately, according to Avasant’s IT Spending and Staffing Benchmarks 2022/2023 study, most businesses now see IT as a strategic resource for navigating through economic volatility. More businesses than ever before in the age of the cloud are intending to boost their IT budgets.

Recent years have been tough on IT budgets: a pandemic that affected the entire world, a temporary recession brought on by lockdowns, supply chain disruptions, the war in Ukraine, and an 18-month period of escalating inflation. Avesant previously warned that IT budgets might be badly impacted at each stage, but businesses consistently refused to reduce their IT investment. It is becoming increasingly obvious that most businesses today see IT as a strategic asset for navigating the turmoil of recent years. IT is no longer considered a cost center, but rather a strategic asset with potential to affect both the top and bottom lines.

Avasant is an international management consulting company that specializes in transforming the potential of technology into workable business plans for the biggest organizations in the world.

The IT Spending and Staffing Benchmarks 2022/2023 analysis by Avasant found that more businesses plan to boost their IT spending in 2022 than at any prior point in the cloud era. Only 11 percent of businesses are planning budget cuts for IT operations, while almost 80 percent foresee budget rises. Companies are forecasting median increases in IT budgets of 5.0 percent, which would be the highest growth in more than ten years. The free executive summary contains an overview of the metrics, design, demographics, and methods of the study.

“The pandemic gave IT organizations a chance to prove their value,” said David Wagner, Senior Research Director at Computer Economics, a service of Avasant Research, based in Los Angeles. “They enabled entire enterprises to work from home. They rebuilt companies around new digital business plans. The trust they earned is paying off so that despite signs of an impending recession, budgets are still increasing.”

Indications of an Imminent Recession

Compared to 2019, before the pandemic and the difficulties we are currently facing, the IT department today is more resilient, agile, innovative, and business-focused, according to the report. Approximately 39 percent of businesses, up from 29 percent in 2019, claim to have at least half of their applications in the cloud today. The average percentage of the total IT operating budget allocated to cloud infrastructure increased from 2.3 percent to 5.7 percent this year. As the top categories of new spending efforts, data analytics, digital transformation, and systems and data integration are closely behind cloud apps and cloud infrastructure.

In 2019, businesses spent, on average, 75 percent of their IT budgets on maintaining their operations and only 25 percent on expanding or modernizing their businesses. Only 65 percent of the budget was spent this year, on average, on maintaining the existing business. A whopping 35 percent is devoted to expanding or reinventing the company.

However, there are early indications of an imminent recession or at the very least a slowdown, and inflation is unquestionably a factor – rather than just the desire to transform – behind some of the budget increases. So, the future is not entirely rosy and sunny. However, the majority of CIOs claim that their budgets are sufficient and that their employers want them to prioritize cost-cutting over providing better customer service.

The relationship between IT spending and the overall economy is deteriorating. While some measures, such as personnel turnover rate, may be impacted by the economy, total budget growth and the majority of expenditure priorities do not appear to be impacted. Regardless of the state of the economy, IT is a key component of every company’s strategy. Budget increases are no longer a matter of if or even how much. Budgets are going to go up. And they will grow as necessary. How should these resources be used in order to best address the issues that will arise during the coming years? You can make the most effective use of those resources with the aid of the measurements in this study.

About the Avasant Study

The Computer Economics IT Spending and Staffing Benchmarks 2022/2023 study’s foundation is a thorough poll of over 225 IT executives in the US and Canada regarding their anticipated IT budgets and workforce levels for 2022–2023. For small, middle, and large enterprises as well as for 29 sectors and subsectors, the report gives benchmarks for IT spending and staffing.