IT Spending Expected To Rebound Amid Renewed Focus on Modernization Projects


After a year of belt-tightening measures, IT spending is expected to bounce back, findings from the annual State of IT report indicate. In order to pursue strategic initiatives, companies are willing to open their wallets on investments in new and innovative technology. Here, 10 industry experts weigh in on the findings and share how IT modernization and rise in hybrid remote workforces are driving future IT investments. 

According to Spiceworks Ziff Davis’ annual survey The 2022 State of ITOpens a new window , 53% of businesses in North America and Europe anticipate year-over-year tech spending to increase, and 35% predict it will stay the same. The report predicts that the annual revenues of 61% of businesses would increase in 2022, and the need to prioritize IT projects, upgrade outdated tech and security concerns will drive up IT spending in 2022. 

David JoostenOpens a new window , the president and CEO, Vodafone AmericasOpens a new window , also expects to see an increase in spending on productivity software, devices and device management, networking, remote access security, and IT support to enable flexible working solutions in the days ahead.

“An increase in tech budgets will help organizations prioritize the four main technology areas for enabling anywhere work: productivity tools, secure access, network connectivity, and analytics,” Joosten said. “Technology leaders will need to update their strategies to help foster employee productivity, allow better collaboration between ‘anywhere’ workers and office workers, and support a better employee experience.”

Imaging technologies company, Canon’sOpens a new window senior director, corporate information technology, Michael LebronOpens a new window plans to continue investing in artificial intelligence and cloud services. “As digital transformation continues to expand into a true hybrid setting, expectations will continue to evolve, and so will the investments in technology,” Lebron said, adding that the move to remote work has pushed “IT leaders (to) sought out opportunities to automate processes and protect data.”


Source: The 2022 State of IT

See more: Tech Spending to Boom in 2022: Cloud, Security, Hardware to Drive 26% Growth in IT Budgets

The State of Technology Spending in 2022

The accelerated pace of digital transformation and the need to support an increasingly remote workforce has propelled companies to become more resilient and adaptable. But CEOs and technology buyers expect to deal with challenges over limited product availability and supply chain issues over the next 12 months.

Also noticeable in Spiceworks Ziff Davis’s forecast is a significant 26% increase in spending on hosted/cloud-based services in 2022, most of which is credited to “servicing a geographically distributed remote workforce far from an organization’s own IT support staff,” the report said. 

“In 2021 last year, we talked about the rush to remote work. We all knew that (IT) budgets were stagnating and that organizations were no longer investing in emerging tech,” Liz RoncoOpens a new window , VP of product, SWZD explained in a webinar during SpiceWorld Virtual 2021. 

“We see that shift in 2022 and it’s not the same. Businesses are confident that their revenues are going to be up, which means they are reinvesting in their IT budgets. Businesses are also going to be reinvigorating investment in emerging tech, especially security solutions. Another big shift is ‘you’. 25% of IT professionals will look for a job change in 2022 and 86% are only going to consider roles with remote work options,” Ronco said.

Source: SpiceWorld Virtual 2021

See more: SpiceWorld Virtual 2021: Top Highlights & Insights From Leading Tech CXOs

Here are top five findings from the survey along with expert insights who weigh in on factors that will drive future IT investments:  

1. 61% of companies expect their revenues to increase in 2022

Tech adoptions are expected to go through an overhaul after the pandemic-driven economic uncertainty, as per the survey. As businesses plan for a post-pandemic future, 61% of companies expect revenues to increase in 2022, and 53% plan to increase their IT budgets, the 2022 State of IT report shared. 

Source: The 2022 State of IT

Commenting on the forecast, Tom SheaOpens a new window , CEO at OneStreamOpens a new window , highlighted that increase in IT budgets would enable continued investment in agile planning solutions, as well as reporting and analytic solutions. The financial software company highlighted the need for cloud-based corporate performance management (CPM) software solutions to enable effective and productive decision-making.

Andrew FilevOpens a new window , SVP and general manager at Wrike (a Citrix company)Opens a new window , said that organizations would continue to invest in IT as they shift to hybrid environments. “In 2022, IT should focus increased budgets on technologies that sit in the sweet spot between structured and unstructured solutions, bringing work together in one place and improving transparency and productivity,” Filev said.

See more: SpiceWorld 2021: Steve Wozniak On Evolving Developer Roles, Data Transparency & More 

2. IT budgets will shift to cloud (26%) and managed services (17%) in 2022

According to the report, as organizations have migrated more applications and services away from on-premises data centers, a significant increase in the percentage of total IT budgets going toward hosted/cloud-based services from 22% in 2020 to 26% in 2022 was recorded.

FlexentialOpens a new window cloud and managed services, COO Mike FuhrmanOpens a new window , believes in having IT resources that can be maintained virtually. “A shift of IT infrastructure to a cloud platform provides the necessary flexibility while also allowing for the essential tasks like security and data protection to be carried out,” Fuhrman said while commenting on the report findings.

“The shift to cloud supports remote work because cloud resources were inherently built for a remote environment. At its core, cloud technology enables collaboration and scale. It can support decentralized networks that offer system reliability,” Marc LinsterOpens a new window , chief technology officer, EDBOpens a new window said.

However, simply adopting cloud technology will not help companies become truly digital in a remote and hybrid work environment, Software AGOpens a new window ‘s chief technology officer Bernd GrossOpens a new window argued. “IT teams will need to work closely with business partners to ensure a centralized, connected hybrid cloud architecture to address pain points and optimize security,” he explained.

See more: SpiceWorld Virtual 2021- 4 Key Highlights from Day 1 

3. 44% of businesses will push for 5G adoption in the next two years

5G availability is now greater than it was two years ago, the survey found. Commenting on the trend, FlexentialOpens a new window chief innovation officer Jason CarolanOpens a new window cited, “5G has the potential to provide high speed access anywhere and may reduce the needs for multiple connectivity options, reducing spend for Wi-Fi pucks, wireline, and tethering add-ons.” 

Moreover, secure, reliable, high-speed connections are the factors that make 5G a preferred technology for work from anywhere businesses, said Joosten. 5G adoption will also boost employee productivity and diversity, and inclusion in the workplace. “In terms of ROI for businesses, recent research by McKinsey found that 67% of organisations with remote working in place saw a rise in productivity, customer satisfaction, employee engagement and diversity and inclusion,” Joosten said.

4. 86% of IT job seekers will consider remote roles next year

Among IT professionals seeking a new job in 2022, 86% will consider remote roles, which makes it possible to start a job in another region without the need to change physical locations, the report said.

While remote work opens new opportunities in the IT labor market, companies should be aware that the new work from anywhere environment could lead to increased competition for talent within the industry, the Spiceworks report added. 

Adopting cloud and SaaS applications need different skills in a remote and hybrid work environment, Jesse StockallOpens a new window , chief architect at Snow SoftwareOpens a new window said, and companies are looking for more specialized IT roles. Stockall also added that many companies are becoming open to more flexible work schedules and are less tied to employing workers in specific locations. 

“The upcoming generation of digital-native employees know how they want to work with tech. The expectations of this incoming group of talent are changing how the IT department operates. Companies are prioritizing versatile employees with a variety of skills and enthusiasm to grow/be trained, especially in a world that is forever changing,” he stated on the report findings.

The shift toward remote work signifies that there will be more opportunities as well as challenges in the IT labor market, Lebron said. “Remote work has provided greater access and opportunities for IT professionals, allowing them to expand their career paths and seek employment whether within or outside of their organizations. But organizations also benefit. It has also created opportunities for companies that once never had access to these IT talent pools to recognize and adapt to evolving consumer needs and attract the top talent of tomorrow,” he added.

See more: Why Digital Transformation Fails: 6 Insights on Speeding Innovation

5. 46% of businesses anticipate limited tech product availability and shipping delays

Despite the optimism around rising company revenues and IT spending ticking upwards, businesses also expect to run into potential issues. In 2022, roughly 40% of IT departments expect to deal with the following: limited product availability, shipping delays or logistical problems, supply chain issues, increases in product costs, and chip shortages, the report found.

Source: The 2022 State of IT

Information technology and services company, CGSOpens a new window EVP of digital transformation, IT, and cybersecurity John SamuelOpens a new window , believes that the tech product availability and shipping delays would ultimately depend on the product and the underlying dependencies on global supply challenges. “As a resolution to the challenges, companies will be looking to add more options to their list of suppliers; and where possible, partner with suppliers that are nearshore,” he said.

The Future of IT Spending Lies in Tech That Matters

The arrival of the COVID-19 pandemic triggered a sense of urgency for businesses to alter their IT spending on non-essential expenses. This renewed outlook toward investing in ‘tech that matters’ would play out as an essential factor that empowers companies to address the needs of the future of work.

“Businesses expect corporate revenues and IT budgets to rise significantly in 2022, following cuts to spending on non-essential projects during the pandemic,” said Peter TsaiOpens a new window , head of technology insights, SWZD. “This renewed optimism is good news for the tech industry, as businesses plan to invest to prioritize new IT projects, facilitate digital transformation, and enable productivity in a hybrid working environment,” Tsai concluded.

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