2023 Tech Spend Pulse

When asked about the level of IT spend, the percentage of respondents spending over $500 million USD annually increased from 14% to 19% YoY.

But regardless of an organization’s headcount, IT spending varies considerably. Over a third (34%) of enterprises with more than 10,000 employees spend upwards of $500 million annually.

Overall, respondents’ organizations spend 12% of their revenue on IT, with enterprises in the Americas spending more than their European counterparts.

Previous Flexera industry reports have shown estimated wasted spend around 30%. Respondents in this year’s Tech Spend Pulse indicated an improvement in wasted spend across desktop software, data center software, SaaS and IaaS/PaaS, which likely stems from organizations implementing cost optimization measures.

However, these figures are respondent estimates, not precise values, possibly influenced by optimistic views as enterprises continue to refine cost-saving processes.

Enterprises with more than 10,000 employees nearly doubled the percentage of revenue spent on IT, from 6% to 11% YoY. Organizations with 5,001 to 10,000 employees also increased IT spend from 8% to 13% YoY.

It’s no surprise that technology companies, seeking continued innovation, spend more of their revenue on IT. Product-related industries are more focused on the production of physical goods and therefore spend less.

Across the board, more than half of respondents expect IT budgets to slightly increase. Expectations of significantly increasing IT budget dropped by more than half from last year (from 13% to 5% overall).

Industry analysts often estimate the costs of running the business to be as high as 70%, which aligns with respondents’ estimates of 67%.

Decentralization of IT spend has remained flat over the past two Tech Spend Pulses, with 26% of spend controlled by business units (up from 25% YoY) and 74% by central IT (down from 75% YoY).

As enterprises shift to the cloud, many are attempting to reduce the number of data centers they own and operate. Eight percent plan to eliminate data centers entirely, and 61% plan to reduce their data center footprint to some degree.

As IT spend shifts more toward SaaS, cloud and other non-on-premises resources, visibility into that spend becomes more challenging. New tools and processes are required to keep track of all IT assets in the organization—and how much the business is spending on those assets.

When questioned about their biggest IT decision-making challenges, respondents indicated too many decisions/complexity of decisions and decisions taking too long to make were the top challenges (81%). Not enough good quality data also continued to be a top challenge.

For the first time, more than 90% of respondents chose the same top challenge: increased prices from vendors. The number-two challenge—ensuring spend efficiency—increased from 81% to 87% YoY.

This year’s survey questioned respondents about their current and future use of leading technology vendors across traditional on-premises software, SaaS and public cloud.

With products that touch virtually every part of the IT stack, Microsoft takes the top spot on this list year after year, and over half of respondents (54%) said the vendor is their largest by spend. AWS increased from 21% to 27% YoY, and SAP increased from 13% to 21% YoY.