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

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Disruptions caused by the prolonged Covid-19 pandemic forced businesses to innovate and align with new realities to sustain operations. This included allocating more resources on devices, software and hardware tools to support hybrid work, secure their environments, and maximize efficiency. Spiceworks’ State of IT report 2022, based on a survey of more than 1,000 technology buyers in companies across North America and Europe, maps the trends in terms of IT budget allocations, factors influencing IT spending, and future challenges and opportunities. Here are the key highlights of the report.

After a tumultuous 2020, the 2022 State of IT reportOpens a new window unearths the changing patterns in SMB and enterprise IT spending and projects that overall IT budgets will increase in 2022. IT leaders plan to step up investment in cloud-based solutions and managed services, while SMBs will spend more on hardware and software products and solutions. IT budget allocations will be driven by security concerns, the need to manage technological obsolescence, and the need to embrace emerging and futuristic technologies.

“Businesses expect a continuation of pandemic-related challenges in 2022. Despite these perceived obstacles, our annual study — which tracks trends over multiple years — reveals that businesses are upbeat about the future, and more willing to invest in tech now than in the past two years.” 

– 2022 State of IT report from Spiceworks Ziff Davis

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Key Insights from the 2022 State of IT Report

Most businesses expect their revenue to increase in 2022

The first piece of good news gathered from businesses across diverse sectors in North America and Europe is that a staggering 92% expect their revenues to either increase (61%) or remain stable in 2022. The fact that only 8% expect their revenues to fall, compared to 31% of businesses in 2021, indicates that companies are confident that disruptions accelerated by the Covid-19 pandemic are now things of the past. The positive outlook on future revenues, however, is more pronounced among North American businesses than European ones.

Here’s a figure from the State of IT report that shows businesses’ expected revenue in 2022 based on their size:

Rising revenues will influence IT budget allocations in 2022

What’s interesting, though not surprising, is that improving revenue projections have motivated a majority of businesses (53%) to boost IT spending and 35% to keep their budgets intact in 2022, indicating a sense of caution among companies despite a positive future outlook. However, the fact that 63% of businesses were not interested in enhancing IT budgets in 2021 reflects how quickly the mood has changed. 

This is especially true for enterprises with more than 500 employees. Approximately 64% of enterprises will increase IT budgets in 2022 compared to 45% of businesses with 100-499 employees and a similar number of smaller businesses. 67% of firms in the financial services sector expect IT budgets to increase in 2022. Yet again, the positive outlook is demonstrated more by North American businesses than European ones. 

“Large businesses are ready and willing to invest in technology this year, and two-thirds of them will increase their IT budgets in 2022, compared to just 45% of small and medium businesses. The top reasons why companies plan to grow their budgets are increasing priority on IT projects, replacing the need to update older technology which used to be the primary reason for over a decade,” said Peter Tsai, head of technology insights, marketing at Spiceworks Ziff Davis.

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Cloud and managed services will gobble a lion’s share of IT budgets

The 2022 State of IT report found that a rapid shift of data, applications and services away from on-premise data centers significantly impacts how businesses allocate their resources. In 2022, even though the spending on hardware (30%) will be more than those on software (28%), cloud-based or hosted services (26%) and managed services (17%), the spending trend is quickly slowly but surely moving away from hardware to these other services.

For instance, while hardware allocation, as a percentage of the overall IT budget, is set to decline from 33% in 2020 to 30%  in 2022, investments in cloud-based services are set to rise from 22% to 26%. Similarly, spending on managed services is expected to increase from 15% to 17% in the same period.  The average enterprise allocations on managed services is projected to touch 21% in 2022, compared to just 13% allocated by medium-sized businesses.

Fig 2: Average IT budget allocations between 2020 and 2022

If we talk about the spending on cloud-based services, the report found that businesses will allocate a bigger portion of the budget on productivity solutions (13%) and online backup or recovery solutions (10%). They will also spend up to 10% of their budgets on cloud-based solutions like business support applications, web hosting and email services, IaaS solutions, cloud storage and file sharing solutions, IT management solutions, developer tools and communications solutions.

In terms of business spending on managed services, businesses will spend equally on a diverse set of solutions such as those offering managed security, managed hosting, managed hardware support and infrastructure, managed communications services, and managed IT help desks. Businesses will also spend a small portion of their budgets on managed networking and managed wireless and mobile computing solutions.

Heightened security concerns and increased priority on IT projects to drive IT spending in 2022

The survey also revealed that increased focus on security and businesses’ determination to assign higher priority to IT projects will drive an increase in tech spending in 2022. Other leading factors include a need to upgrade outdated IT infrastructure to modern standards, supporting a remote workforce, and driving employee growth. Factors such as inflation, increased product costs, and changes to regulation/compliance standards, and business revenue increases will also play a role in influencing businesses to increase IT budgets in the coming year.

A renewed focus on futuristic technologies

After a hiatus in 2021, the focus of businesses on emerging and futuristic technologies returned to 2020 levels, with around 70% of businesses interested in purchasing IT automation and Gigabit Wi-Fi networking technologies in 2022. A majority of companies are also interested in onboarding modern technologies such as IoT solutions, virtual desktop infrastructure (VDI) solutions, and container technologies. Other emerging technologies that have caught the attention of businesses are converged/ hyper-converged infrastructure, 5G, serverless computing, AI, Edge computing, and 3D printing. 

Do you think businesses will spend more on emerging IT technologies in 2022? Comment below or let us know on LinkedInOpens a new window , TwitterOpens a new window , or FacebookOpens a new window . We’d love to hear from you.