Digitization Causing Growing Volatility in Corporate IT Budgets

Despite Flat Budget Outlooks at Industry Level, IT Departments are Changing Radically as Organizations Pursue Digital Strategies, According to CEB

News provided by

CEB

Nov 03, 2016, 08:08 ET

ARLINGTON, Va., Nov. 3, 2016 /PRNewswire/ -- CEB (NYSE: CEB), a best practice insight and technology company, today released findings from its 2017 IT budget and benchmark survey showing that 90 percent of organizations expect changes in their IT budgets for 2017. While IT budgets on average are expected to remain flat, there is more volatility expected across organizations next year as technology spending becomes more closely linked to business strategy.

Fifty-one percent of organizations expect an increase in their IT budgets next year and 38 percent expect a decrease – and those changes can be substantial. A quarter of those surveyed expect a greater than 10 percent change.

"While IT budgets look flat on average, that average is masking digitization's influence on corporate IT," said Andrew Horne, IT Practice Leader, CEB. "In many companies, leadership teams are looking to IT to recommend technology and provide guidance needed to implement digital strategies, and IT budgets at those organizations are increasing. But for others, the push for digital transformation is happening outside of IT – if it's happening at all – and budgets are going with it. In either situation, CIOs are making substantive changes to the IT operating and staffing model to support their organizations' digitization efforts, all of which means changes to budgets."

Digitization is also having a big effect on IT teams, from the CIO down. CIOs are now taking ownership of digitization-related activities, such as online platforms and analytics. Of CIOs who have responsibility for activities outside of IT, 71 percent now devote more attention to digitization activities than traditional business services responsibilities. IT teams are also adding new roles. In 2017, nearly 40 percent of organizations expect to have a Chief Data Officer, and more than half will employ data scientists.

Additional Budget Trends

IT opex growth is expected to grow 1.4 percent and capex will remain flat, largely due to rapid growth in cloud spending. A quarter of IT departments will spend more than 20 percent of their budgets on cloud solutions next year, up from only six percent in 2015.

Security spending is also increasing, up to 4.5 percent of opex from 3.9 percent last year. There is a corresponding increase in full-time security employees as a share of IT staff, now up to 3.6 percent. IT staff as a share of total staff has also increased to 4.7 percent.

For more information on the changes in IT budgets for 2017, visit CEB.

About CEB

CEB is a best practice insight and technology company. In partnership with leading organizations around the globe, we develop innovative solutions to drive corporate performance. CEB equips leaders at more than 10,000 companies with the intelligence to effectively manage talent, customers, and operations. CEB is a trusted partner to nearly 90% of the Fortune 500 and FTSE 100, and more than 70% of the Dow Jones Asian Titans. More at cebglobal.com.

Logo - http://photos.prnewswire.com/prnh/20131107/PH13083LOGO

SOURCE CEB