For more than ten years, Spiceworks Ziff Davis has published the State of IT, an annual study offering insights into forward-looking tech budget and adoption trends. This forward-looking global study helps tech marketers and IT decision makers understand what to expect over the next 12 months, based on in-depth survey data of thousands of respondents in North America (NA) and Europe.
While our global report highlights differences between the two regions, many European findings warrant further attention. This article offers more actionable data on the region, expanding upon key tech and business insights through the lens of nearly 500 European-based IT decision makers, including 138 in the United Kingdom (UK), 208 in Germany, and 150 from other parts of the European Union (EU).
The 2022 State of IT: Key findings in Europe
- European businesses are optimistic about the future: 57% expect their revenues to grow in 2022, compared to only 31% from the year prior.
- Tech spending will accelerate in 2022, as 51% of companies in Europe expect to increase their technology budgets in 2022, compared to only 33% from the year prior.
- The need to support a remote workforce and upgrade outdated infrastructure will be the top contributors to increased IT spending in Europe, with each influencing nearly half of budget increases.
- Over the last two years, the share of IT budgets allocated to hardware and software (the largest spending categories) has decreased, while spending on cloud-based and managed services has increased.
- European businesses will spend a significantly larger share of IT budgets on managed services (18%) compared to their NA counterparts (15%).
- European businesses are more eager to adopt emerging technologies than their NA counterparts: Planned adoption rates of blockchain (45%) and virtual reality (46%) are more than twice as high as in NA.
Business optimism abounds in Europe
Companies around the world are upbeat about their prospects over the next 12 months, and those in Europe are no exception: 57% of European businesses expect their revenues to grow in 2022, compared to only 31% in the year prior.
Our multi-year insights suggest statistically significant growth in IT budgets: 51% of companies in Europe plan to increase year-over-year (YoY) technology spending in 2022, compared to only 33% going into 2021, and 39% going into a pre-pandemic 2020.
While this is positive news for businesses and tech vendors alike, growth levels won’t be as high in Europe as in NA: 64% of NA businesses expect revenues to increase in 2022, and 55% plan to increase budgets.
Expected IT Budget Change by Region (Over prior year)
Among businesses expecting to grow tech budgets in 2022, those in NA have planned on average a 31% increase, compared to 21% in Europe.
Looking closer at the European numbers, larger organizations are more likely to spend more on tech: 58% of European companies with 500+ employees plan to increase IT budgets in 2022, compared to 46% of smaller organizations.
Expected IT Budget Change in Europe (Over prior year, by company size)
On a country-by-country basis, German companies are more positive about tech spending in 2022: 55% of German companies expect to increase IT budgets YoY, compared to 42% of businesses in the UK.
German businesses are also more optimistic about their sales performance over the next 12 months: 62% of German businesses expect their revenues to rise in 2022, compared to 53% of businesses in the UK. Further affirming regional differences, 16% of businesses in the UK believe revenues will fall in 2022, compared to only 7% of German businesses.
It’s also notable that businesses in the UK expect to be more impacted by global supply chain issues than those in Germany. With roughly 45% of companies in the UK expecting to be impacted by shipping delays and supply chain issues, compared to roughly 25% in Germany, it is evident that many UK-based organizations are bracing for great challenges in 2022.
Percentage of Companies Expecting Tech Buying Challenges in 2022
Tech spending will accelerate in 2022, as 51% of companies in Europe expect to increase their technology budgets in 2022, compared to only 33% from the year prior.
Factors driving spending levels in Europe
Many businesses have invested in technologies to support remote workers in recent years, especially those in Europe. The 2021 State of IT in Europe revealed 80% of respondents planned on making IT-related changes due to COVID-19.
SWZD’s Future of Remote Work study (2021) found roughly one-quarter of employees (26%) around the world will work remotely (fully or hybrid) on a permanent basis. The same study found remote work on a long-term basis will be higher in Europe: 35% of workers were expected to work remotely permanently in the UK, compared to 22% in the US.
To that end, pandemic-related needs will continue to drive spending in Europe in 2022 and beyond. Nearly half of respondents residing in Europe (48%) said supporting a remote workforce due to the COVID-19 pandemic would be a factor increasing IT budgets in 2022, compared to only 27% in NA. This shift, along with the need to update outdated IT infrastructure, represent the top factors leading to budget increases, with a higher priority on IT projects and security concerns rounding out the top four.
Drivers of 2022 IT Budget Increases (By region)
While expected business revenue increases will be a factor influencing roughly one-third of European companies planning to grow tech spending in 2022, it won’t be the primary driving force.
Survey respondents in Europe were slightly more senior (27% CEO and VP-level titles in Europe vs. 17% in NA), so some differences might be attributed to the demographics of respondents.
Survey respondents in Europe were slightly more senior (27% CEO and VP-level titles in Europe vs. 17% in NA), so some differences might be attributed to the demographics of respondents.
2022 IT budget allocations in Europe
Overall, European businesses will allocate IT budgets similarly to companies across the globe. Across regions, hardware represents the largest tech spending category. But as organizations in Europe have migrated more applications and services away from on-premises data centers, we’ve observed a significant increase in the share of IT budgets allocated to hosted/cloud-based services — from 22% in 2021 to 25% in 2022.
Much like in other regions, this shift has come as the share of hardware and software spending have fallen over the last few years.
Expected IT Budget Allocations (Percentage of total IT budget)
Regional IT spending differs in one important aspect: Businesses based in Europe plan to allocate a significantly greater share of overall IT budgets to managed services compared to those in NA — 18% vs. 15%, respectively.
This trend is uniform throughout Europe. In Germany (19%), UK (19%), and the rest of Europe (18%), managed services spending represents a significantly larger share of overall budgets vs. in NA (15%).
Expected IT Budget Allocations (Percentage of total IT budget)
It should be noted that some of the regional spending difference may be attributed to the widespread need to support the higher proportion of remote workers in Europe; however, businesses in the region historically spent more on managed services before the pandemic than their NA counterparts.
Emerging technology adoption in Europe
While IT budget growth in European businesses might lag slightly behind growth in NA, the region is well ahead in the adoption of emerging technologies. As was the case last year, across nearly a dozen emerging technology areas, planned adoption rates are significantly higher in Europe than NA.
As evidence, planned adoption rates of blockchain (45%) and virtual reality (46%) in Europe are more than twice as high as in NA — despite anticipated emerging tech adoption in NA bouncing back from a dip in 2021.
Expected technology usage rates in Europe are also expected to be significantly higher for containers, virtual desktops, IoT, converged infrastructure, 5G, serverless computing, artificial intelligence, edge computing, and 3D printing.
Emerging Tech Adoption: Current + Planned Use Within Two Years
Within Europe, German businesses expect to adopt technologies at a higher rate than businesses in the UK. For example, the planned adoption rate of container technology is 73% in Germany, compared to 50% in the UK. Similarly, 70% of German businesses plan to use virtual desktops within the next two years, compared to 56% of UK-based companies.
UK adoption rates of many emerging technologies, while lower than German rates, are still considerably higher than planned adoption rates in NA.
Emerging Tech Adoption: Current + Planned Use Within Two Years
Adoption of emerging security tech in Europe
As the shift to remote work and high-profile ransomware attacks continue across regions, plans to adopt newer security technologies are on the rise to address the increase in security concerns driving 2022 budget plans.
European demand for many emerging security solutions is expected to be significantly higher than in NA. But that isn’t to say that NA businesses aren’t prioritizing security spending in 2022… they’re just slightly behind the curve.
Emerging Security Solutions Implemented or Planned within Two Years
Many more global technology spending insights await
While we covered many forward-looking European insights from the study, additional key findings await. The full 2022 State of IT report includes many more interactive charts and data cuts to help you explore plans across regions and companies of different sizes.
For deeper insights into how global and regional business changes will impact you and how SWZD’s comprehensive data can help you achieve your 2022 revenue goals, connect with one of our industry experts.
Schedule time with our team to dive deeper into the 2022 State of IT and talk about how we can help your business grow next year.