Though many economic experts agree the U.S. is on the cusp of a recession, SWZD research shows there are still massive opportunities for tech vendors to maximize growth.
Data amassed for our upcoming report has revealed unexpected insights: Even as businesses cut back in other areas to prepare for an economic downturn, tech spending will continue to grow.
Recession or not, understanding future market trends and the challenges that drive them is critical — B2B tech buyers and vendors turn to SWZD’s annual State of IT report each year to preview future-looking business spending and tech adoption plans for the upcoming 12 months.
Background on the latest edition of the survey:
1,400+ respondents — IT decision makers (ITDMs) from server room to boardroom — spanning North America and Europe.
Although B2B tech brands will have to wait until September 2022 for the full analysis, we’ve decided to release an exclusive look at our early findings — the good and bad news — to inform proactive tech marketers on how to successfully navigate a recession.
First, the bad news: Organizations are looking for areas where they can scale back spending
Businesses around the globe are worried about the economy and how a recession will affect their bottom line. This will likely translate into reduced overall spending.
According to our data:
- The vast majority of companies (86%) are concerned about a recession
- The majority of companies have plans to take precautionary measures, most commonly:
- Reducing non-essential spending
- Re-evaluating current vendors and contracts
- Freezing or slowing hiring
- Decommissioning unnecessary infrastructure
- Focusing on market segments likely to prosper in an economic downturn
- Reducing employee headcount
Now, the good news: Even if businesses begin to cut back in other areas, tech spending will actually increase.
While a downturn will drive many businesses to reduce some budget on some items, IT investments have been deemed essential — SWZD data indicates IT spending kickstarted during the pandemic will persist:
- Most companies (51%) plan to increase year-over-year IT spending (compared to only 6% planning on a decrease), continuing the trend of healthy IT investment over the last several years.
- Among businesses planning to increase tech spending in 2023, IT budgets are expected to grow by 21%, on average
Why will tech spending continue to grow, even in a recession?
The IT modernization efforts pushed forward by the pandemic not only helped organizations survive, it helped them thrive under difficult circumstances. Technologies spanning hardware, software, cloud, and managed services enabled the “remote work revolution,” allowing many businesses to adapt and operate effectively during the COVID-19 outbreak… while shifting perceptions of the value of technology in the workplace.
Now, more than two years later, even in the face of a recession, businesses no longer see technology as a cost they have to absorb. Rather, IT has become a facilitator — an investment critical to success in the modern business environment.
In other words, technology has become an essential budget item vs. a “nice to have” bonus — and from our data-driven point-of-view, IT spending levels will continue to grow, even as businesses reduce spending in other areas.
Our research shows that over the next 12 months, the top factors driving spending will include:
- Increased priority on IT projects
- Need to upgrade infrastructure (e.g., outdated hardware and software)
- Inflation
- Increased security concerns
“Businesses that invested in technology during the pandemic saw significant benefits. Our research revealed improvements across performance, reliability, security, and even reduced overall IT costs among organizations that modernized their infrastructure — even if it was initially out of necessity.”
– Jim Rapoza
VP and Principal Analyst
Aberdeen Strategy & Research, a division of SWZD
Why tech brands must continue to invest
Despite significant discussion around a recession, tech spending shows few signs of slowing down.
Our data indicates the IT industry will continue to grow even in an economic downturn. As ITDMs actively seek out new products and solutions to enable business productivity, it would be a mistake for tech vendors to cut back on sales and marketing activities… leaving money on the table.
Want to cut through the noise to find your in-market opportunities? Contact us to learn how to build Authentic Connections with ITDMs in search of a solution like yours.
Interested in more data and insights?
If the possibility of a recession makes you worry about client retention or how to maximize your demand generation ROI on a tighter budget, check out our latest blogs to help B2B organizations navigate a recession:
Four Ways to Elevate Your Customer Retention and Renewal Strategy