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Diving certificate:
- When technology leaders look ahead to the next year, most expect IT budgets to increase, according to Forrester. The analyst firm surveyed 2,200 business and technology decision makers for two August reports.
- Nine in 10 respondents expect IT spending to increase in 2025. Three-quarters of executives expect higher budgets for software and technical staff, driven by growing enterprise appetite for AI capabilities and broader modernization initiatives, the reports said.
- Forrester predicts that technology spending will grow 5.3% year-over-year through 2024, compared to a 4% increase in 2023. But for many companies, budget increases will merely keep pace with inflation. “Global inflation is averaging 5.9% and will force technology managers to strategically reallocate their IT budgets,” said Matthew Guarini, vice president and director of research at Forrester, in a recent blog post.
Diving insight:
Business leaders want more and better technology to streamline operations, increase efficiency and drive innovations that increase revenue. But in an election year marked by global economic volatility, they can’t afford runaway budgets.
CIOs have become accustomed to the push-and-pull dynamics that underlie digital transformation efforts. With increased use of the cloud, many organizations have felt the burden of rising costs. Generative AI’s hunger for high-performance computing resources is having a similar impact, as investments in the technology fail to deliver measurable returns.
Cloud and AI will still be key areas of investment in the coming year, said Paul McKay, vice president and director of research at Forrester, in a blog accompanying the reports. “Enterprises are investing even more heavily in the cloud, both for AI infrastructure and service support, and are migrating more of their workloads to the cloud,” McKay noted.
According to Forrester, expecting immediate gains from generative AI is a short-sighted mistake. While nearly 9 in 10 respondents expect to invest more in AI-related data infrastructure, talent and tools over the next 12 months, without a comprehensive and flexible long-term strategy, that money would be wasted.
“You need to be able to run AI workloads wherever they are needed, from the PC to the data center to the cloud, and you need a modern data platform,” Forrester said.
McKay recommends that technology leaders increase or maintain their current investments in optimizing cloud usage and cut spending in targeted areas to reduce the cost of AI workloads.
To offset rising spending on AI, cloud and technical talent, CIOs can turn to a number of other potential cost-cutting solutions.
As platform-based strategies evolve, organizations should focus on eliminating the technical debt associated with siloed, single-task applications.
“For years, teams have built and maintained their own applications or insisted on idiosyncratic ‘ideal’ architectures, leading to massive technology proliferation,” said Sharyn Leaver, chief research officer at Forrester, in a blog post.
“It’s time to inventory and replace your bespoke applications and siloed infrastructure that serves only one or a few applications,” Leaver said.
