Budgeting for next year’s technology investments
Budgeting for next year’s technology investments

IT Budgeting 2023: Technology Investments for the Year Ahead

Persistent inflation, rising interest rates, continuing supply chain issues: Leading indicators point to economic uncertainty. Yet enterprise technology budgets appear to be immune to the turbulence, as IT spending will grow 5.1% in 2023, Gartner predicts. Businesses are amping up investments in datacenter systems, devices, applications, and more.

This IT optimism is a lesson of the pandemic, according to Forrester, which reports that two-thirds of U.S. IT pros expect tech budgets to increase over the next 12 months. Many organizations “accelerated their move to digital during the pandemic and will continue to do so going forward,” the analyst notes.

The 2023 State of IT report from Spiceworks Ziff Davis (SWZD) draws similar conclusions. While 6% of companies will scale back, 51% are full steam ahead on IT increases.

4 IT Spending Buckets for 2023

Where will organizations invest their growing IT budgets? Industry experts point to four key areas:

Cybersecurity – Cyber threats are a concern for organizations large and small. Business leaders are well aware of the growing risks of ransomware, email phishing schemes, theft of customer data, and related risks.

That makes cybersecurity priority No. 1 for many businesses. Spending on security and risk management is pegged to leap 11.3% in 2023, according to Gartner. But companies aren’t just installing new cybersecurity solutions. They’re also taking a more holistic approach in which they expect security to be built into every component of their IT infrastructure.

For instance, they’re demanding that IT vendors provide proof of secure practices throughout the hardware and software supply chains. They’re also investing in tools that help them build security into the applications they create in-house.

No-code application development – No-code app builders enable organizations to produce their own software without coding. “The increased demand for custom software solutions in support of digital transformation has sparked the emergence of citizen developers outside of IT,” Gartner reports. In fact, 41% of non-IT employees now customize or build data or technology solutions.

No-code tools enable nontechnical employees to quickly and easily build secure, reliable forms, surveys, and applications. They can even design workflows and achieve no-code business process management (BPM). Use of no-code/low-code (NCLC) technologies will nearly triple in the next few years to make up 70% of new applications by 2025, Gartner says.

According to Harvard Business Review, NCLC applications “can provide a close fit to business requirements, can be implemented quickly, and typically cost much less than systems developed in-house.” It’s no wonder investments in these tools are increasing.

Artificial intelligence (AI) – Machine learning (ML), robotic process automation (RPA), advanced analytics, and other forms of AI are finding their way into more areas of our personal and professional lives. Expect more businesses to find new use cases for AI in 2023 and beyond. As Intel CEO Pat Gelsinger recently put it, “If you’re not applying AI to every one of your business processes, you’re falling behind.”

Companies will rely on AI to understand customer demand, optimize supply chains, maintain equipment, augment workers, and serve customers more effectively. It’s no wonder spending on AI-centric systems will surge at a compound annual rate of 26.5% between 2022 and 2026, IDC predicts.

 Enabling technologies – Enabling technologies are innovations that drive new business models or revolutionize corporate culture. As organizations pursue digital transformation, enabling technologies will become a bigger part of overall IT spend.

In particular, spending on collaboration platforms has seen double-digit growth in the past five years, IDC reports. That trend will continue as companies embrace hybrid work environments. Whether your workforce is primarily onsite or almost purely remote, your teams need tools that help them manage projects, share documents, and communicate when and how they want.

Collaboration tools dovetail effectively with employee-built applications and workflows. Going forward, such capabilities will help organizations attract and retain Millennials and Zoomers. These digital natives expect employers to provide them with the latest innovations and functionality.

Subtle Spending Shifts

Growing investments in IT notwithstanding, there are some areas where enterprises could scale back in 2023, says the SWZD survey. For instance, companies plan to trim non essential spending (43% of respondents), re-evaluate vendors (30%), and decommission outmoded IT infrastructure (29%).

Likewise, only 31% of IT departments plan to hire additional tech staff. In fact, 59% of businesses said it’s “somewhat” or “very” difficult to find skilled IT workers.

That’s especially true for application developers. There will be a worldwide shortage of 4 million full-time developers in 2025, IDC predicts, resulting in a 15.1% shortfall in available talent. That’s another reason organizations are investing in no-code app builders.

Finally, while companies told SWZD they’ll spend more on IT at least partly because of inflation, more important drivers were prioritizing technology and running the business better. That’s a smart strategy. The payoffs for targeted IT spending include efficient operations, engaged employees, satisfied customers, and business growth.