- Businesses are focusing on multi-year projects in 2022, as companies move away from 2020’s turnkey technology projects and 2021 efforts to fix and pad the technology stack. For the first time in two years, businesses are again approving projects with three to five-year timelines.
- Longer-term deals offer CIOs greater certainty regarding cost and the availability of technical skills.
- With talent scarce though, companies require more managed services and outsourcing.
“SCS provided the expertise, pricing data analytics and human capital to provide niche focused IT cost savings services all while being 100% independant.” – VP of IT Sourcing F200
A Rise in IT Spending
According to the latest forecast by Gartner, Inc., two in five CIOs and CxOs expect the IT budget to increase between 6%-15% in the next three to five years. Worldwide IT spending will hit $4.47 trillion in 2022.
Top Five Largest IT Spending Markets
- Enterprise Software – this increase is driven by infrastructure software spending continuing to outpace application software spending. Software leaders like Microsoft, IBM, Oracle, SFDC and Cisco are pouring millions into improving security features and new capabilities to meet new demands.
- IT Services – from cybersecurity services to thwart ransomware attacks to enabling customers’ Microsoft software suite, IT services are in high demand for nearly all organizations today.
- Data Center Systems – businesses of all shapes and sizes are transforming their IT environments for the multi-cloud and hybrid cloud world, which is a mix of data center or on-premise solutions alongside multiple cloud offerings. Though the data center systems market saw little impact from the COVID-19 pandemic, companies did invest in a mix of new infrastructure like servers and hyperconverged infrastructure as well as hybrid cloud offerings.
- Devices – spend on devices reached an all-time high in 2021 as remote work, telehealth and remote learning took hold. In 2022, companies will either upgrade existing devices or invest in multiple devices to thrive in a hybrid work setting.
- Communications – compared to 2021, although communications services will see the slowest growth rate percentage-wise in 2022 compared to 2021, these services will have the largest total spending levels next year. Because of the pandemic, companies were forced to embrace work from home arrangements, making IT communications software and services more critical to companies than ever before.
CIOs to Rethink Strategy
Disrupted operating models are driving IT spending, as companies rethink how they use tools to reduce work friction. Companies are still trying to figure out how to best collaborate. CIOs will employ a number of tactics as they pursue the next wave of projects. With the spending injection, CIOs need to rethink what technology businesses should invest in, making way for quick wins alongside a long-term strategic plan.
Most are choosing those that help guard the business against the constant volatility caused by the pandemic, trade wars, climate change and other internal and external changes. The cloud is also serving as a “key element” for businesses looking to achieve digital transformation and support the new remote workforce. In 2020, because of the Coronavirus, the cloud market became larger than the non-cloud market for the first time. By 2025, Gartner expects it to be double the size of the non-cloud market. As a result, business and technology consulting services will emerge as one of the fastest-growing sectors in IT services.
Reliance on Partners
Rethinking operations is expensive, and many organizations are shy of the costs related to transformation. Businesses rely on partners, like Software Contract Solutions to help deliver a balance of data pricing analytics and expertise that organizations can draw from to operate effectively. Software Contract Solutions offers a free initial consultation and IT contract/proposal assessment. Contact us today.