Slowing corporate revenues are impacting IT spending, according to the Computer Economics annual IT Spending and Staffing Benchmarks study for 2016/2017..
The Irvine, Calif. firm’s survey of more than 200 IT executives in the United States and Canada showed that IT operational spending will increase only 2% this year, the least since the start of the recovery in 2012.
Smaller organizations with IT budgets of less than $5 million are feeling the pinch most, as they are planning on average a mere 1.7% increase. Large and midsize organizations on average are increasing IT operational budgets by 2.9% and 2.7%, respectively.
“We’re hoping that small organizations are not the canary in the coal mine,” Computer Economics’ president Frank Scavo said in a press release. “A lot will depend on whether economic conditions strengthen or weaken in the second half of 2016.”
The number of IT executives hoping that the c-suite will let them increase their budgets is slightly higher than the number anticipating a budget reduction as the year progresses, resulting in a net 1% positive indicator for that trend. That compares with the minus 4 percentage points recorded in 2015 and the minus 15 percentage points at the start of the recovery period in 2009.
“IT executives feel a fair amount of certainty around their spending plans,” the firm said. “While spending growth has slowed, there is no sense of panic.”
Spending this year is being directed toward new investments in business applications, security, and cloud technology. As more applications move into the cloud, IT capital spending on data-center infrastructure on average will be flat for the third year.
Also unchanged on average is IT staff headcount.