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Companies’ 2019 IT spending priorities aim to spur business growth

Companies may finally understand the correlation between IT spending investments and business growth initiatives. 

Companies want to innovate and grow, but they don't always walk the talk with IT spending investments. A recent survey indicates that enterprises may finally be waking to the reality that growth and innovation require IT spending to back them up.

According to the recent Spiceworks report “The 2019 State of IT,” 89% of companies expect their IT budgets to grow or stay the same over the next 12 months, with 38% predicting growth.

Among larger enterprises of 5,000 employees or more, 56% expect an IT budget increase over 2018; among smaller enterprises of 500 to 1,000 employees, only 42% expect an increase over last year, according to the report.

Spiceworks, “The 2019 State of IT,” 2018.

IT spending priorities signal IT projects foundational to business

The top drivers for IT spending increases were the need to upgrade older IT infrastructure (64%), an increasing priority on IT projects (56%) and a greater need to shore up IT security (56%).

These reasons for IT spending reflect a growing recognition that, where business growth, innovation, data security and operational efficiency are critical, IT spending is now central to forwarding those objectives.

Curiously, and perhaps contrary to traditional wisdom, smaller companies are making hardware investments and large enterprises are investing in cloud services.

Compared with last year, smaller companies--those with less than 100 employees--have increased investments in hardware (31% of IT budget allocation in 2018, compared with 42% in 2019). At the same time, large enterprises increased their cloud budget allocations. Companies with 1,000 to 4,999 employees increased cloud spending by 2 percentage points, while enterprises with 5,000+ employees increased cloud budgets by 3 percentage points.

Traditionally, smaller enterprises may turn to cloud services because they don’t have large budgets to spend on on-premises IT infrastructure or may lack the IT skills in-house to manage their IT infrastructure. Data indicates, however, that smaller companies may be investing in some hardware for a basic IT foundation, and larger enterprises are turning to cloud computing to achieve greater agility and innovation.

Ultimately, as companies continue to weave their way toward digital transformation, they have found that IT infrastructure upgrades are key to transformation efforts and business innovation—as well as their security initiatives and cost-cutting measures.

"Today’s escalating business challenges are driving IT organizations to make bigger Investments in software, systems and networks to support their expanding corporate initiatives,” said Jeffrey Kaplan, managing director at THINKstrategies Inc., an IT consulting firm.

As IT spending priorities become central to business innovation and growth, IT pros may gain a seat at the table alongside their business counterparts.

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Lauren Horwitz

Lauren Horwitz is the managing editor of Cisco.com, where she covers the IT infrastructure market and develops content strategy. Previously, Horwitz was a senior executive editor in the Business Applications and Architecture group at TechTarget;, a senior editor at Cutter Consortium, an IT research firm; and an editor at the American Prospect, a political journal. She has received awards from American Society of Business Publication Editors (ASBPE), a min Best of the Web award and the Kimmerling Prize for best graduate paper for her editing work on the journal article "The Fluid Jurisprudence of Israel's Emergency Powers.”