This year, the average IT budget increased by 3.6%, which may not sound like much, but Gartner recognizes it as the largest increase in a decade. But before you start waving around the corporate credit card, it’s good to gain perspective on what’s hot — and not — in IT infrastructure and services. What trends should you prioritize for your IT budget this year? Should you switch from a CAPEX approach to one more focused on OPEX?

What do IT budgets look like this year?

Volatility is the rule. In this climate, it’s probably no surprise IT budgets have cycled up again. The mandate for IT leadership is still digital transformation, but under this heading is demand for new revenue streams and modernization for combating the tumultuous market. These trends contribute to the uptick in IT budgets.

You can’t buy your way out of all the challenges you’re currently facing, but bigger budgets will help many select technology to help navigate the current volatility. Watch for these budgets to be applied to more streamlined, cloud-based IT architectures, new revenue streams, modernization, and hiring IT talent. All this spending doesn’t inevitably lead to bloat. A careful assessment of tools that provide quick wins as measured against a more long-term strategic focus is the new rule of the day. What are you looking to do with your IT budget? Will you take a custom approach or go with off-the-shelf options?

What’s hot in 2022?

Accenture reports 55% of increased IT budgets this year will focus on digital spend. Cloud push is up by 10% over 2021. There are four key areas:

• Innovation budgets will expand with prototypes and use cases for tools like blockchain, artificial intelligence, and virtual reality.
• New revenue streams will emerge in correlation with budget bumps as organizations increasingly focus on product diversification to combat market volatility.
• Process automation and digitization is hot; more companies will deploy robotic process automation.
• Companies may also be inclined to select new enterprise resource planning (ERP) solutions for supply chain management and planning.
• Data center and network improvements are hot. Cybersecurity and moving to cloud and hybrid models will continue to capture attention this year.

More organizations will adopt new cloud-native managed services, build out local colocations in regional data centers, or a hybrid combination involving a move to the cloud and incorporates legacy outsourcing and/or a managed services private cloud. The increased proliferation of internet of things (IoT) products almost dictates a combination of local data and cloud-based benefits. But this push will leave some former IT trends out in the cold.

What’s cold?

IT is moving away from certain technologies as much as it is pursuing others. Watch for a rapid defunding of legacy systems and on-site data centers. Hardware is giving way to cloud ware, or at least to digital supplementation, in part because of the shortage of cybersecurity talent to maintain these assets. Your CIO may argue on-site data warehousing platforms are too outdated not to migrate to cloud-based architectures, and in most cases, they’re probably right.

On-site hardware and workloads are being outsourced to third-party vendors, but so are internal IT teams. As the technology talent shortage looms, expect more enterprise organizations to seek out new managed services resources for keeping the lights on in the IT and engineering space. One study suggests 70% of startups’ innovation and software development budgets will be firmly in the hands of outsourced developers by 2023. While hiring in-house developers may be cold right now, it’s more related to an inability to find talent than the desire to hire.

The Windsor Group Sourcing Advisory is here to help you retool your existing IT infrastructures. Talk with us today to discover why we’re the go-to advisor for the world’s most innovative enterprises.