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As they make budget plans for 2016, IT organizations in the U.S. and Canada are of two minds. Some IT organizations are bullish about the future and even forecasting a revival in IT capital spending. Others, particularly larger ones, anticipate no growth in their budgets and appear to be hunkering down.
As shown in Figure 4 from our study, IT Spending and Staffing Outlook for 2016: Divergence Ahead, we forecast that IT operational budgets will grow about 2.0% at the median. While still positive, the growth rate is slowing from the rate of improvement over the pervious four years.
Yet our outlook study also finds that IT capital spending appears ready to stage a comeback from its recessionary doldrums, and more than one IT executive reports that business leaders are stepping forward to drive demand for innovation and investment. “The company has invested in IT as an investment for growth and market differentiation,” an IT director for an insurance company comments in the study.
Which outlook is correct? On the surface, our top-line projections for IT operational spending, IT capital spending, and IT staffing for 2016 look not much different from the slowly reviving pace of the past three years. Below the surface, however, this coming year looks markedly different. There is a distinct divergence between the haves and the have-nots. Small and midsize organizations, particularly those in the financial, professional, and technical services markets, are aggressive in their forecasts for IT operational spending. Perhaps even more upbeat, small companies intend to increase IT capital budgets by a substantial margin, a jump in growth-oriented IT investment that has been absent for some time. “Investment in technology is tied to business growth, and we are poised to grow in coming years,” a CIO for a marketing services company commented in the study.
Yet in sharp contrast to the outlook for smaller services companies, large organizations, particularly those in the manufacturing sector, are clamping down. Several IT executives lamented that despite rising demand for IT services, they are being asked to maintain the status quo on spending. “Our IT budget is facing an expectation that it has to decrease,” wrote a development manager with a large health insurer. “However, we fully understand that we have to invest in new areas, so cost-cutting measures will be taken in areas where they can be found.”
Meanwhile, security will be a top priority and migration to the cloud ongoing. In the full study, we provide guidance for IT executives in the U.S. and Canada as they firm up spending plans for the coming year. The study assesses IT operational and capital spending plans for 2016, priorities for IT spending and investment, and plans for hiring and outsourcing.
In our annual IT budget outlook study for the U.S. and Canada, we provide guidance for IT executives as they firm up spending plans for the coming year. This year our report is based on projections of IT spending plans by 86 organizations in the U.S. and Canada. The study assesses IT operational and capital spending plans for 2016, priorities for IT spending and investment, and plans for hiring, outsourcing, and pay raises for IT workers.
This Research Byte is a brief overview of our report on this subject, IT Spending and Staffing Outlook for 2016. The full report is available at no charge for Computer Economics clients, or it may be purchased by non-clients directly from our website (click for pricing).