Dive Brief:
- As tech leaders look ahead to next year, most anticipate IT budgets to increase, according to Forrester. The analyst firm surveyed 2,200 business and technology decision-makers for two August reports.
- Nine in 10 respondents expect a bump in IT spending in 2025. Three-quarters of executives anticipate larger budgets for software and technical personnel, driven by growing enterprise appetite for AI capabilities and broader modernization initiatives, the reports found.
- Forrester projects tech spend to increase 5.3% year over year in 2024, up from a 4% bump in 2023. But for many organizations, the budget increases will merely keep pace with inflation. “Global inflation is averaging 5.9% and will force tech executives to strategically reallocate IT budgets,” Forrester VP and Research Director Matthew Guarini said in a recent blog post.
Dive Insight:
Business leaders want more and better technology to streamline operations, improve efficiency and drive the innovation that grows revenue. But in an election year marked by global economic volatility, they can’t risk runaway budgets.
CIOs have grown accustomed to the push-and-pull dynamic underlying digital transformation aspirations. More cloud use led many companies to feel the weight of growing costs. Generative AI’s hunger for high-capacity compute resources is having a similar impact as investments in the technology fail to produce measurable returns.
Cloud and AI will nevertheless be major areas of investment in the coming year, Forrester VP and Research Director Paul McKay said in a blog accompanying the reports. “Organizations are investing even more heavily in cloud, both for AI infrastructure and services support, along with the migration of more of their workloads to the cloud,” McKay noted.
Looking to generative AI for immediate gains is a short-sighted mistake, according to Forrester. While nearly 9 in 10 respondents expect to increase spending on AI-related data infrastructure, talent and tools in the next 12 months, that money will be wasted in the absence of a broad and flexible long-term strategy.
“You’ll need the ability to run AI workloads wherever needed, from the PC to the data center to the cloud, and you’ll need a modern data platform,” Forrester said.
McKay recommends tech leaders increase or defend current levels of enterprise investment in cloud usage optimization practices, trimming spend in targeted areas in order to attenuate the cost of AI workloads.
To offset growing spend on AI, cloud and tech talent, CIOs can reach for a number of other potential cost-cutting solutions.
As platform-based strategies mature, enterprises should focus on eliminating technical debt tied to siloed, single-task applications.
“Years of teams building and maintaining their own applications or insisting on idiosyncratic ‘ideal’ architectures has resulted in massive technology sprawl,” Forrester Chief Research Officer Sharyn Leaver said in a blog post.
“It’s time to inventory your bespoke applications and isolated infrastructure that serves just one or a few applications and replace them,” said Leaver.
