80% of businesses expect IT budgets to grow or remain steady in 2021

The global COVID-19 crisis is a catalyst for change, spurring businesses to continue to invest in technology to support and secure a remote workforce, despite slowing corporate revenue growth resulting from the pandemic, a Spiceworks Ziff Davis study reveals.

IT budgets 2021

Of the more than 1,000 businesses surveyed, 76% plan on long-term IT changes as a result of COVID-19, and 44% plan to accelerate digital transformation plans.

However, with organizations looking to cut back on expenses, tech budget growth has slowed compared to last year. Among businesses taking part in the study, 33% plan to increase their IT budgets in 2021, compared to 44% in the prior year, while 17% of companies expect IT budgets to decline in 2021.

IT budgets in 2021: Remote work revolution to drive new spending

Similar to findings from previous waves, replacing aging IT infrastructure and growing security concerns will be among the biggest drivers of budget growth next year. But with more than half of businesses planning to retain flexible work policies permanently, the “remote work revolution” will continue to drive new spending.

Among the businesses increasing IT spend in 2021, the following factors will influence budget growth next year: Increased priority on IT projects (45%), changes to business operations during COVID-19 (38%), and the need to support a remote workforce (36%).

“During the rush to remote work caused by the pandemic, it quickly became clear that technology is the glue that keeps businesses and employees connected,” said Peter Tsai, senior technology analyst at Spiceworks Ziff Davis.

“With more people working remotely than ever before and face-to-face meetings out of the question, organizations wouldn’t have been able to maintain business continuity or keep productivity levels high without the many technologies companies rely on… including laptops, video conferencing, VPN, chat apps, internet connectivity, and more.”

Spending shifts and slowing future tech adoption

As working remotely becomes the new normal, IT needs will shift. As in previous years, hardware will still account for the biggest portion of IT budgets in 2021. But as a percentage of total IT budgets, anticipated spending in this category has dropped significantly in the last two years — from 35% in 2019 to 31% in 2021 — as businesses increase cloud and managed services spending.

Additionally, while businesses will continue to invest in emerging tech, adoption plans are expected to drop significantly year over year, especially among smaller businesses, which will deprioritize cutting-edge features in favor of more pressing needs such as updating outdated infrastructure and securing a remote workforce.

At the same time, enterprises (1,000+ employees) will adopt select emerging technologies at up to 5x the rate of small businesses (1-99 employees) over the next two years, as is the case with Blockchain (9% current and planned adoption among small businesses vs. 53% among enterprises).

Additionally, enterprises will adopt IT automation technology, virtual reality, edge computing, containers, 5G, and VDI at significantly higher rates than SMBs.

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