Annual Report Scanning the Future of IT Budgets and Tech Trends
Scoping the Impact of COVID-19 on the Future of Tech
Throughout 2020 and 2021, the emergence of COVID-19 triggered global, profound shifts in the tech landscape. A worldwide rush to remote work ensued as the pandemic spread — permanently altering how much of the world does business.
To help newly remote employees remain productive while working from home, resilient and hardworking IT departments deployed technologies essential for empowering a remote workforce.
At the same time, the global crisis caused economic uncertainty amid lockdowns and unexpected interruptions to well-established systems, prompting many businesses to cut back on non-essential expenses… including some tech spending plans.
To gain greater visibility into the legacy of these shifts as companies adjust and prepare for new market dynamics, Spiceworks Ziff Davis (SWZD) scanned the IT landscape by surveying more than 1000 technology buyers in companies across North America and Europe.
Our analysis: Businesses expect a continuation of pandemic-related challenges in 2022. Despite these perceived obstacles, our annual study — which tracks trends over multiple years — reveals that businesses are upbeat about the future, and more willing to invest in tech now than in the past two years.
Key Insights
- 61% of companies expect their revenues to increase in 2022. Only 8% expect revenues to decrease.
- IT budget growth acceleration: Most businesses (53%) plan to increase tech spending or keep budgets the same (35%) YoY.
- The share of IT budgets allocated to cloud and managed services will grow YoY, taking share away from hardware and software, as some workloads shift away from on-premises data centers.
- Organizations will reinvigorate spending on futuristic tech: Emerging tech adoption plans — especially for newer security solutions — increased significantly YoY.
- Tech buying challenges will continue in 2022. More than 40% of businesses expect shortages, price increases, shipping delays, and logistical issues.
- Roughly one quarter of IT professionals plan to look for or change jobs in 2022. Among these IT job seekers, 86% will consider remote roles.
In last year’s State of IT, we recorded 64% of businesses enabling a remote workforce due to the global COVID-19 crisis. Our more recent research exploring the future of remote work discovered 55% of companies accelerated tech spending to address needs created by the pandemic.
The same report also indicated ~25% of employees will work remotely after it’s safe to return to corporate offices, which implies tech investments in hardware, software, and services will be necessary to power the ongoing work-from-home movement.
This year’s survey affirmed our hypothesis: 2022 State of IT data indicates modest spending increases detected in 2021 are expected to scale significantly in 2022.
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Organizations were optimistic about future business prospects as they initially planned for 2020. However, the COVID-19 pandemic unexpectedly sent the world economy into uncharted territory. With little visibility into future timelines or clear paths forward, 2021 corporate revenue growth projections fell significantly year-over-year, with almost one-third of businesses expecting revenues to decline.
As organizations consider their roadmap in 2022, most expect business to rebound: 61% of companies expect their revenues to increase in 2022, with only 8% expecting them to fall.
Expected Total Company Revenue Change in 2022
(over prior year)
Notable 2022 Revenue Trends
By Geography
64% of North American businesses expect revenues to increase vs. 57% in Europe
11% of European businesses expect revenues to decrease vs. 6% in North America
By Industry
72% of businesses in manufacturing and retail sectors expect revenues to increase
70% of businesses in financial services expect revenues to increase
Most businesses (53%) expect their IT budgets to grow over the next 12 months.
IT Budget Growth to Soar
Just like corporate revenues, IT budgets are expected to grow in 2022. Our investigation into the future state of IT indicates the number of companies expecting budget increases will soar in 2022, and budget growth expectations have risen significantly higher than in the past two years (even before the pandemic).
Overall, 53% of businesses in North America and Europe anticipate year-over-year tech spending to increase and 35% predict it will stay the same. Among businesses planning to boost tech spending in 2022, IT budgets are expected to grow by 26% (31% in North America vs. 21% in Europe), on average.
Meanwhile, only 7% of organizations expect their IT budgets to fall in 2022; significantly fewer than the 17% of organizations that expected their tech spending to decrease in 2021.
Expected IT Budget Change
(over prior year)
Notable IT Budget Trends for 2022
64% of enterprises (500+ employees) plan to raise IT budgets vs. 45% of SMBs (1-499 employees)
67% of businesses in the financial services sector expect IT budgets to increase in 2022
With organizational plans to spend more on tech in 2022 on our radar, we can hone in on exactly how businesses will increase investments in IT. Our data suggests the digital transformation efforts kickstarted by the rush to remote work will have an ongoing influence on future tech spend.
Since we started tracking spending drivers among businesses planning to increase IT budgets, the need to modernize out-of-support technology has always been at the top of the list. While still a factor influencing 47% of organizations planning on IT budget growth, the need to bring older infrastructure up-to-speed fell to the second spot this year.
In 2022, the top factor driving companies to increase budgets is an elevated priority on IT projects (49%), which could indicate multi-year modernization efforts that were accelerated by remote work, and a steady shift to cloud-based services have chipped away at legacy technology.
With technology serving as the great enabler allowing businesses to stay productive during the pandemic, more than a third of IT budgets will remain on an upward trajectory for reasons relating to COVID-19.
Additionally, increased security concerns and employee growth have made a resurgence as drivers for IT budget growth this year, as many businesses look to secure workers both in-office and at home.
Note: While anticipated revenue increases in 2022 will be a factor influencing almost one-third of budget increases (32%), they’re not the primary driving force.
Drivers of IT Budget Increases
Over the last couple of years, we’ve observed prices heading skyward on everything from laptops to cars to lumber (and even ketchup too!). While not at the top of the list, we should note that a fair number of companies cited increased product costs (29%) and inflation (22%) as factors behind IT budget increases too.
2022 Budget Drivers, by Company Size
- Most mid-size businesses (52%) and enterprises (56%) cite an increased priority on IT projects contributing to tech spending growth, compared to only 32% of small businesses.
- Mid-size businesses and enterprises are significantly more likely than small businesses to increase budgets due to a need to support a remote workforce during COVID-19, changes in business operations during COVID-19, or a recent security breach.
- Enterprises are significantly more likely than small or mid-size businesses to increase budgets due to corporate tax cuts and currency fluctuations.
Scanning the Tech Spending Clusters: Cloud Takes Budget Share from Hardware
In surveying 1000+ IT decision-makers to understand how technology budgets will be allocated across hardware, software, cloud services, and managed IT services, we’ve observed interesting trends over the years.
As organizations have migrated more applications and services away from on-premises data centers, we’ve recorded a significant increase in the percentage of total IT budgets going toward hosted/cloud-based services — from 22% in 2020 to 26% in 2022.
While hardware will continue to account for the largest share of IT spending in 2022, this category has seen steady declines year-over-year. As a percentage of total IT budgets, hardware spending has dropped significantly — from 33% in 2020 to 30% in 2022.
Showing less movement are managed services spend, which will account for 17% of tech budgets (up slightly from 15% in 2020), and software spend — the second largest spending category — which will account for 28% of tech budgets (down slightly from 29% in 2020).
Expected IT Budget Allocations
% of total IT budget
Budget Breakdown by Company Size
In 2022, enterprises (500+ employees) plan to spend significantly more of their tech budgets (21%) on managed services — which involve outsourcing IT functions to a third-party — than SMBs (14%). This disparity may be due to the need for enterprises to support more remote employees, where managed services would be useful for servicing a geographically distributed remote workforce far from an organization’s own IT support staff.
21% of enterprise IT budgets will go to managed services in 2022, compared to 14% in SMBs
Mapping Hardware Budgets
Despite hardware spending falling as a percentage of overall IT budgets, companies will continue to invest the largest portion of their hardware budgets in laptops in 2022. The shift to laptops as the end-user device of choice follows a two-year trend coinciding with many employees being forced to work from home. Going forward, we expect 25% of workers to go remote on a permanent basis.
While desktops and servers round out the top hardware spending areas in 2022 (14% and 11% of overall hardware budgets, respectively), these categories have been on the decline over the last two years as many IT departments increasingly opt for more portable computers and shift workloads to cloud infrastructure.
Hardware Budget Break Out
% of total Hardware budget
Hardware Spending Plans, by Company Size
In 2022, enterprises are expected to spend a significantly greater portion of IT budgets on security appliances than SMBs. In fact, enterprises — with their bigger attack surfaces — are more likely to increase IT spending due to security concerns overall. And with a larger organization comes needs to support a larger remote workforce: enterprises will also spend more than smaller companies on telephony.
On the opposite end of the universe, small businesses will allocate a significantly greater percentage of their typically modest-by-comparison hardware budgets towards desktops and laptops. On average, the smallest companies plan to spend 21% of their hardware budgets on laptops, compared to 16% in enterprises.
Enterprises plan to spend significantly more on tablets and mobile devices (8% of their hardware budgets) compared to small businesses (6%), which are often used to support traveling employees or workers in the field.
Charting Out Software Budgets
Within the on-premises software category, we noticed big year-over-year shifts.
Productivity software — which is useful for connecting and helping employees collaborate from anywhere — is expected to be the biggest software spending category in 2022, accounting for 12% of budgets, up slightly over a two-year period.
Also on the upswing are database management systems — accounting for 8% of expected software spend in 2022, compared to 6% in 2021 — potentially due to SQL Server 2012 reaching end-of-extended-support status in 2022. Security software spending is up significantly over the past two years, as protecting endpoint devices and remote users has fostered greater concern.
As IT spending shifts into cloud services, the software expenditures associated with on-premises servers are on the decline. As a percentage of total software spend, virtualization and operating systems both dropped significantly over the period spanning 2020-2022.
Software Budget Break Out
% of Total Software Budget
On a regional basis, North American businesses will spend significantly greater proportions of 2022 IT budgets on industry-specific apps and backup and recovery than organizations in Europe. On the other hand, businesses in Europe will spend significantly more in 2022 on database management systems and email servers than companies in North America.
Since 2020, share of software budgets allocated to operating systems and virtualization has fallen signficantly, as workloads migrate to the cloud.
Cracking the Code on Cloud Budgets
Our recent cloud research discovered 50% of all business workloads are expected to run in the cloud by 2023, up from 40% in 2021. In line with that finding, cloud spending as a percentage of overall IT budgets has seen a statistically significant, four-percentage-point increase over the last two years — from 22% of overall tech spend in 2020 to an expected 26% in 2022.
According to our historical data, while spending growth in the cloud category between 2019 and 2021 was energized by adoption of productivity apps and online backup and recovery, growth in 2022 will be fueled by security solutions and desktop-as-a-service — applications that are relevant in a not-so-alternate reality where more employees work from home.
Cloud security accounted for 5% of cloud budgets in 2020 and will represent an expected 7% in 2022. Desktop-as-a-service spending is expected to grow from 3% of cloud budgets in 2020 to 4% in 2022.
Hosted/Cloud-Based Services Budget Break Out
% of total Cloud budget
By company size, we assessed that larger companies will allocate a greater portion of their budgets towards platform-as-a-service, desktop-as-a-service, and developer tools than smaller companies.
A Deep Scan of Managed Services Budgets
On a regional basis, European businesses plan to spend significantly more of their overall IT budgets on managed services (18%), compared to North American businesses (15%). Enterprises also expect to spend more of their tech budgets (21%) on managed services than small (14%) and mid-size (13%) businesses, with the larger companies allocating a greater proportion of managed services budgets towards managed wireless and mobile computing.
Managed security, managed hosting, managed storage/backup, managed hardware support, managed cloud infrastructure, and managed business applications are expected to account for the largest portions of managed services budgets in 2022.
Security concerns have heightened as more employees work from home, generating growth in managed security (increasing significantly from 7% of managed services budgets in 2020 to 10% in 2022). Managed cloud infrastructure has also seen big gains (increasing significantly from 7% in 2020 to 9% in 2022), at the expense of managed hosting (decreasing significantly from 13% in 2020 to 9% in 2022).
Managed Services Budget Break Out
% of total Managed Services budget
Other Factors Boosting IT Spending
With high-level findings covering how the ongoing remote work movement, an increased priority on IT projects, and an anticipated business revenue rebound have impacted IT budget plans in 2022, we’re ready to probe deeper into the details.
As IT buyers scope out solutions, the specific factors pushing businesses to pull the trigger on acquiring new hardware, software, and services remain relatively the same as in previous years, with a few exceptions.
In general, technology end-of-life, upgrade/refresh cycles, and company growth will continue to be the biggest drivers of new technology investments in 2022. However, with end-of-support events for Windows 7 and Windows Server 2008 behind us, the number of businesses citing end-of-life as a purchase trigger has come down to Earth in the last two years — falling from 62% in 2020 to 54% in 2022.
In 2022, software/application compatibility figured into the equation more than in previous years, jumping from 28% in 2020 to 34% in 2022… which could suggest new needs as organizations refresh older operating systems or database systems, or migrate to cloud-based environments that don’t work well with legacy software.
IT Purchase Triggers
By company size, small and mid-size businesses — often stretched thinner than enterprises — are more likely to purchase new technologies due to end-of-life events or end-user needs.
Enterprises tend to have more resources for experimental projects, larger workforces, and have offices and customers in more regions — increasing their likelihood of being swayed by new technology features, hardware compatibility, changes to regulation/compliance standards, the need for better customer support, the need for better tech expertise, and discount offers.
On a regional basis, North American businesses are significantly more likely than European businesses to purchase new technology due to end of life, upgrade/refresh cycles, growth/additional need, and end-user need. European businesses are significantly more likely to buy new tech for access to better expertise and discount offers than their North American counterparts.
Many Businesses Renew Push for State-of-the-Art Solutions
In last year’s State of IT report, we reported that businesses regressed on plans to adopt emerging tech plans due to COVID-19. Far from taking a quantum leap forward by experimenting with futuristic technologies, over the last year or so, organizations prioritized immediate needs yielding quick ROI, like enabling a remote workforce.
Our latest data on 2022 tech adoption shows companies breaking out of their pandemic hiatus, with significant YoY jumps in plans to adopt almost every type of emerging technology.
While YoY adoption plans are up, because of the drastic pull-back in 2021 the overall two-year trend is relatively flat. In other words, we can expect emerging tech adoption rates in 2022 to be similar to pre-pandemic rates reported in 2020.
There is one exception to this rule: Expected adoption levels of 5G have zoomed ahead over the couple of years, unphased by the pandemic-induced pause on tech adoption. That said, 5G availability is now greater than it was two years ago.
Emerging Technology Adoption: Current + Planned Use Within Two Years
While many organizations are just now playing catch-up, others are surging ahead. For example, larger companies typically have more resources to experiment with new solutions that might give them a strategic advantage. Across all technologies represented in our survey, future adoption plans in enterprises rise significantly higher than plans in smaller businesses.
European-based businesses expect to adopt emerging technologies at a significantly higher rate than North American counterparts across the entire range of technologies. This is in line with findings from The 2021 State of IT.
Detailed Business Tech Adoption Plans Within Two Years
Emerging Technology Adoption by Industry
While overall adoption plans are returning to where they were going into 2020, certain industries are far ahead of the curve for specific cutting-edge technologies.
3D printing enjoys a significantly higher current and planned adoption rate in education (62%) and manufacturing (45%), as the technology opens opportunities for prototyping and hands-on-learning.
On a similar wavelength, blockchain enjoys significantly higher-than-average planned adoption rates in retail (41%) and financial services (45%), where the technology might power loyalty programs or enable financial transactions.
Because the financial industry has economic incentives to experiment with emerging technologies, it’s among the most technology-forward industries. In addition to blockchain, expected adoption rates of emerging tech in financial services organizations rise above the curve for IT automation (83%), VDI (64%), hyperconverged infrastructure (60%), 5G (57%), edge computing (53%), artificial intelligence (52%), and serverless computing (50%).
IT services firms — whose business is to advise companies on technology decisions or provide technology services — are early adopters as well. They’re well out in front in their 2022 adoption plans for Gigabit Wi-Fi (76%), containers (56%), 5G (55%), and serverless computing (53%).
Emerging Security Tech Adoption Growth Continues
One technology area where adoption continues its upward climb — despite the pandemic — is emerging security solutions. Driven by the need to secure remote workers and the continued threat of ransomware, companies will plow ahead with investment in emerging security solutions.
For example, within the next two years, more than three quarters of organizations plan to adopt employee training and anti-ransomware solutions to help protect corporate networks, devices, and data. Hardware-based authentication and user behavior analytics tools have likewise seen significant jumps in planned adoption rates.
Emerging Security Solutions Implemented or Planned Within Two Years
*Only included in survey in 2022
On a regional basis, perhaps due to the severe financial penalties outlined in GDPR, European businesses plan to adopt almost all security technologies represented in our survey at a significantly higher rate than businesses in North America.
Most (55%) organizations in Europe plan to use security solutions powered by AI or machine learning in the next two years, compared to only 39% of organizations in North America. Additionally, 65% of companies in Europe will adopt zero trust security solutions, compared to only 51% of companies in North America.
Enterprises are significantly more likely to invest in emerging security solutions than their smaller counterparts, replicating the same adoption patterns seen with other emerging tech. Additionally, companies in the highly-regulated financial services sector — where a breach could have huge financial implications — are much more likely to invest in newer security solutions.
As the shift to remote work generates uncertainty, the labor market is going through a drastic transformation… and IT departments are entangled in the changes. In a recent SWZD Future of Remote Work study, 76% of IT professionals indicated they would prefer to work remotely, at least some of the time.
On the other side of the coin, 72% of technology professionals said the shift to remote work created additional work for IT departments — many of which must now support workers both at home and in the office. The good news is that organizations have plans to grow to meet this demand. In 2022, 40% of companies plan to expand the ranks of their IT staff.
Expected IT Staff Changes in 2022
Enterprises (500+ employees) are most likely to hire in 2022, with 61% expecting to employ additional IT staff, compared to only 30% of SMBs (1-499 employees).
The option to work remotely in some companies has opened more opportunities for IT professionals. According to our data, in 2021, 27% of IT professionals worked from home temporarily and 11% started working from home permanently.
There was a dynamic movement in the job market too, with 17% of the IT workforce looking for a job with a new employer during the pandemic, and 14% accepting and starting a new job.
IT Pros’ Career Changes During the Pandemic (2020-2021)
In 2022, we expect IT pros to continue to make career moves or advance within their current company. For example, one quarter of IT professionals expect to get a raise in 2022, 23% plan to earn a tech certification, and 13% expect to get a promotion.
One quarter of the IT workforce expects to look for a new role, change jobs, or switch careers in 2022
Many also plan to seek changes with a new company in 2022: 13% of IT professionals plan to begin the search for a new job and 11% plan to start or switch employers.
IT Pros’ Planned Career Changes in 2022
Among IT professionals seeking a new job in 2022, 86% will consider remote roles, which makes for the possibility of starting a job in another region without the need to change physical locations.
While remote work opens new opportunities in the IT labor market, companies should be aware that the new work-from-anywhere environment could lead to increased competition for talent within the industry. HR departments would be wise to pay more attention to retaining valued employees who are at risk of leaving for greener (or more flexible) pastures.
Work Models IT Job Seekers Will Consider
The Future of IT Careers Among Different Groups
On a demographic level, our scan of the IT job market turned up more than a few notable patterns on the radar.
Younger generations (Gen Z and Millennials) were much more likely to make big career moves during the pandemic. For example, 31% of IT pros in Gen Z and 19% of Millennial IT pros switched employers during the pandemic, compared to only 10% of Gen X and 8% of Boomers.
In 2022, 31% of IT pros in Gen Z plan to search for a new tech job, compared to 13% of IT pros in other generations. Members of Gen Z are also significantly more likely to switch to a career outside of tech (15%) than IT pros in other generations (6%).
We noticed significant career-related differences between the genders as well. Only 11% of women represented in our study received a raise since the COVID-19 crisis began, compared to 18% of men. Our data suggests that women don’t expect to make up the gap in the future once conditions improve, either.
In 2022, 15% of women working in IT expect to get a raise, compared to 27% of men. Perhaps related to this discrepancy: Women also reported they’re much more likely to switch to a career outside of IT (15%) than men (5%) in 2022.
We also noticed interesting differences between IT staff and management that indicates companies are making viable efforts to retain members of their leadership team, but not necessarily other members of staff.
During the pandemic, senior management (director level and above) were significantly more likely than individual contributors (systems administrators, help desk technicians, etc.) to get a promotion (14% vs. 10%), switch to working from home permanently (13% vs. 9%), move to a different region while staying with the same employer (8% vs. 3%), or move to a different region to take a new job (7% vs. 2%). On the other hand, perhaps because of this uneven treatment, individual contributors were more likely than senior management to start a job with a new employer (16% vs. 10%).
In 2022, individual contributors will be more likely than senior leaders to seek a job with a new employer (15% vs. 11%), while senior leaders will be more likely to move but stay with their current employer (7% vs. 3%) or move to a new region to change jobs (8% vs. 4%).
While 25% of all IT professionals expect to get a raise in 2022, a significantly greater percentage of individual contributors (28%) predict a salary increase in their future than senior leaders (19%).
Despite the optimism around rising company revenues and tech budgets, businesses also expect to face issues due to fallout from the ongoing pandemic. For example, IT buyers expect to encounter challenges when purchasing hardware, software, and services over the next 12 months.
In 2022, roughly 40% of IT departments expect to deal with the following: limited product availability, shipping delays or logistical problems, supply chain issues, increases in product costs, and chip shortages. Secondary but still-important concerns will include supporting remote workers by provisioning them with hardware and software while they work from home.
Anticipated IT Challenges in 2022
At an industry level, the manufacturing industry is most worried about chip shortages. The education sector, which often must supply students with laptops or tablets, is most worried about limited product availability and shipping delays.
On a company size basis, enterprises are more worried than smaller companies about provisioning remote employees and tracking inventory and licenses for remote employees.
2022 Challenges by Industry
56% of manufacturing businesses expect to encounter chip shortages
59% of educational institutions anticipate limited tech product availability
In 2022, there’s reason for optimism, following an overall dip in tech spending growth in 2021.
As businesses plan for a post-pandemic future, 61% of companies expect revenues to increase in 2022, and 53% plan to increase their IT budgets. Tech adoption plans are expected to rebound from their pandemic-induced hiatus, and spending will flow into new areas as remote work will remain a major feature of the new business environment even after it’s safe to return to offices.
The COVID-19 pandemic will continue to have a notable impact on the IT industry — either directly, indirectly through bumps in supply chain issues, or through the legacy of increased levels of flexible work from home.
In the future, tech marketers should pay close attention to the shifting of IT budgets into cloud-based services, at the expense of hardware and software spending categories related to on-premises infrastructure. Additionally, a greater share of IT budgets is expected to go towards the procurement of emerging technologies and security solutions useful for modernizing processes and supporting remote workers.
Remote work and the technologies that enable it also open new job possibilities for IT professionals. In 2022, approximately one out of four will seek employment opportunities at a new company, and now that working from anywhere is more normalized, 86% of job seekers will consider applying for a remote role.
Overall, with an anticipated rebound in spending that will likely surpass pre-pandemic levels, there’s reason for excitement in an environment that will see more money flowing into the tech industry. However, many organizations expect to navigate unresolved challenges in 2022, including product shortages, logistical issues, rising prices, and inflation.
Going forward, tech vendors can better serve IT buyers by understanding their goals and needs as companies navigate these changes. Marketing messages will resonate with IT buyers when campaigns speak directly to pain points and demonstrate how a given solution will address current problems and concerns. As a best practice, tech marketers will see the most success when they can offer decision-makers proven solutions at the right time… when they’re actively researching how to solve problems and need help the most.
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Methodology
The Spiceworks Ziff Davis survey was conducted in July 2021 and included 1,145 IT buyers from organizations across North America and Europe. Data was also collected in APAC and LATAM, which will be reported separately because it cannot be trended with previous waves.