Technology companies usually start structuring their budget for the upcoming year around September or October. But like building trust with your client base, budgeting tends to be one of those ongoing things that turns into a year-round project. Some new research by IT networking firm Spiceworks gives us an idea how much service providers are allocating to their IT projects and identifies exactly where they’re dumping those dollars – well, for the most part.
According to the report, responding companies have set aside just over $291,000 for IT in 2015, with more than half (57 percent) of them planning to spend more than they did last year. With the list of priorities laid out, it’s clear to see that IT service providers need to be mighty strategic in spreading the allowance around.
Although PC sales have been on a sharp decline for quite some time, IT companies realize that good hardware is still the backbone of the business. This theory is backed up by the 41 percent of respondents who cited hardware as their chief IT priority. To no surprise, computer hardware is getting the bulk of the budget as desktops (20 percent), servers (19 percent), and laptops (15 percent) rank atop the list.
I was personally surprised to find mobile devices highlighted at the bottom with only 7 percent of IT budgets devoted to smartphones, tablets, and the like. Although there’s a lot of money in supporting the BYOD movement, the activity in this area might suggest that IT vendors are being cautious about proceeding with their own enterprise mobility plans. When factoring in all the headaches that reportedly come along with it, the slow spend could actually be a wise approach.
With the foundation firmly cemented, IT firms are ready to go big with their software initiatives, where Spiceworks shows they plan to invest 33 percent of the budget. Respondents are allocating the most to OS platforms (17 percent), with productivity (16 percent), virtualization (14 percent), and BDR software (11 percent) receiving admirable attention. Security ranked the lowest in priority with only 8 percent of the budget.
2014 will be remembered for several high-profile security breaches. The threat landscape is constantly expanding, so increasing spending on better access control, intrusion prevention, malware protection, and other security technologies is never a bad idea. Although this doesn’t necessarily mean service providers aren’t being proactive in enhancing their detection and response capabilities, I’d still be interested to see how these results compare to other findings on IT security spending.
IT service providers have a lot to gain from the flexibility, scalability, and agility cloud computing brings to the table. The cloud is often spoken of as this cryptic place in the sky, but it really breaks down into a gaggle of different categories and applications. Spiceworks drilled down into some specific areas to provide a clearer view of where in the cloud IT dollars are being spent.
Of the 12 percent allocated for cloud projects, email hosting and web hosting ranked number one and two in importance with 18 percent and 16 percent of the budget respectively thrown their way. As I steadily inch dangerously closer to the disk space limits of my so-called “unlimited” website plan, I realize just how amazing cloud hosting sounds right now. Rather than run the risk of having to upgrade to a new plan and possibly migrate over to a whole new server, the cloud grants the luxury to tap into the storage and bandwidth you need, when you need it. Sweet.
Last but not least, the Spiceworks report dedicated some love to managed services, where firms will spend about 10 percent of the total IT budget. IT services were cited at the biggest priority with 19 percent of the pie, closely followed by consulting and Internet connectivity, which respectively snagged 16 percent of total spend. Hosting, storage/backup/archiving, email/collaboration, and cellular received what I guess you can call honorable mentions.
It would’ve been nice to see this category fleshed out a bit more with a stronger focus on specific managed services, especially since that stuff is so hard to track down. On the bright side, I did track down some data on the rapid growth of industry. A recent survey by MarketsandMarkets projected that the global MSP vertical is on pace to increase spending to the tune of more than $193 billion by 2019; over twice as much as the $107 billion spent last year. The MSP Alliance suggested that by then, managed services could make up as much as 20 percent of the global IT budget.
Balancing the Budget
In order to maintain balance and profitability, increasing spending in some areas usually means decreasing it in others. So if you’re planning to throw more into the cloud or virtualization, it may make sense to cut back on what you pour into hardware. Priorities aside, one part discipline and one part flexibility is the best way to approach IT dollars in 2015. While it’s cool to stick to your guns, your budget should be as dynamic as your business, ready to shift and shape with the rifts of the ever stormy IT space.
Photo Credit: Chris Potter via Flickr