Why Digital Transformation Spending Is on the Rise—Even in Uncertain Times
There’s no denying the rising inflation, of late, and its continued effect on the economy— spawning fears of an impending recession. To brace themselves for the potential economic downturn, some companies are cutting jobs and spending, as recently reported by a number of news outlets, including Reuters and The Wall Street Journal.
In years’ past, when the U.S. was leading into a recession, we typically saw IT get its share of budget cuts, as organizations would halt any and all investments in technology projects—but that’s not the case today. Today, we’re seeing continued strong investments in digital transformation, despite building economic troubles—a change that is undeniably the result of how we’ve evolved since the start of the COVID-19 pandemic.
Over the past two years, companies have been forced to accelerate digital transformation and adopt new technologies to address the seismic shifts in how they operate and adapt to the pandemic, ongoing supply chain disruptions and other changes to their business. While at first organizations may have viewed these technology investments as temporary fixes to address immediate business needs, over the past two years, they’ve learned that IT is not a cost center, but a business driver—and digital transformation is critical to building resilient organizations that can succeed regardless of the external factors happening around them.
Continued digital transformation spending in a time of economic uncertainty is perhaps the best illustration of this shift in mindset. In fact, a recent CNBC Technology Executive Council survey found that “more than three-quarters of tech leaders expect their organization to spend more on technology this year. No one said they’ll be spending less.”
CNBC’s research aligns with the data we saw in our very own survey, “The Expanding Role of the CIO,” which polled more than 200 CIOs across a wide variety of industries. We found:
- 52% of respondents indicate their IT budgets have increased since the start of the pandemic.
- 66% of respondents said the pace of digital transformation change is moving faster now than before the pandemic.
- CIOs are shifting more of their budget toward digital transformation—a third (33%) of respondents are spending 21% or more of their IT budget on digital transformation compared to 26% of respondents before the pandemic.
- And this shift will continue as the majority (88%) indicate they plan to spend more of their IT budget on digital transformation projects over the next 3-5 years.
- Finally, when asked which projects were at the top of their list over the next 12-18 months, respondents cited cybersecurity (43%), followed by cloud-first strategy (37%) and data integration/data management (32%).
The data is clear: Organizations recognize the valuable role the public cloud, automation and other digital technologies play in building a resilient business that can adapt, compete and grow, even in volatile environments (the current economic turmoil included). The bottom line is digital transformation is one thing organizations can count on in uncertain times, and we’re happy to see the elevated role its playing in not only IT, but also across the business. To learn more about how the COVID-19 pandemic has changed IT budgets, priorities and mindsets, download the full survey report.