IT budgets set to grow 3.3% in 2015, hitting five-year high

Positive outlook for CIOs as budgets accelerate their move away from maintenance spending.

IT departments are more optimistic about their budgets than any other time in the last five years, anticipating growth of 3.3% in total IT spending for 2015.


This growth is supported by greater investment in innovation and a reduction in the funds allocated to maintenance spending – or ‘keeping the lights on’ – which has reduced from 63% in 2011 to 57% in 2014.


These are the annual findings from member-based advisory company CEB, which surveyed almost 200 organisations worldwide, representing over £46 billion in IT spending.


Andrew Horne, managing director at CEB, said: “It’s encouraging to see such a bright outlook for IT budgets in 2015. In our experience many companies expand their IT spending through the year as new opportunities emerge, meaning we could be looking at a budget growth of well over 5%.


“One in six IT departments have taken steps to become more adaptive, such as introducing more flexible budgeting and making better use of the cloud, which allows them to reallocate around 40% of their budgets to innovation and other initiatives that drive growth in 2015. This means they can respond more quickly to business demand and can ‘do more’ without necessarily ‘having more’ resources.”


At the same time, the growth of consumer expectations around technology means that companies are ramping up investment in areas such as digital channels, mobile applications and social media tracking tools. Tying these customer-facing capabilities together and making them consistent is a growing priority, with 45% of IT organisations expecting to have a role dedicated solely to user experience by the end of 2014.


The report also found that the role of the CIO is continuing to extend beyond IT, with 58% now owning at least one non-IT functional area. The focus on business intelligence and analytics is sharply on the rise, with the proportion of CIOs directly involved in this area having doubled from 15% to 30% in the last year.


Horne added:
“We’re seeing a group of companies aggressively managing down their maintenance budgets so they can invest more in areas such as digital channels and analytics. Companies that are unable to make this budget shift and adapt to shorter, more unstable planning horizons risk being left at a competitive disadvantage.”
Other key findings include:
· Organisations expect to see a 3.3% growth in overall IT budgets – the highest reported in five years
· 33% of total IT budgets are expected to be allocated to business opportunity and innovation; meanwhile 57% will go towards maintenance and mandatory compliance activities
· 0.8% growth is expected in IT staffing levels
· 91% of organisations used a cloud solution in 2014. More than one-third of companies are now allocating at least 6% of spending to cloud solutions (up from 23% in 2013)