Here’s a sample of key findings from this year’s pulse report based on an IT spending survey of 501 IT executives from around the world. Scroll to find out more.
This pulse picks up where previous Flexera State of Tech Spend reports left off, providing a high-level perspective on technology and spend issues that concern senior procurement and IT leaders as they develop strategies and make decisions that influence the trajectory of their businesses.
The Flexera 2022 Tech Spend Pulse survey tapped 501 global technology executives and high-level managers with significant knowledge of their organizations’ overall budgets. They represent a broad cross-section of industries.
We encourage the reuse of data, charts and text published in this pulse under the terms of this Creative Commons Attribution 4.0 International License. You are free to share and make commercial use of this work as long as you attribute the Flexera 2022 Tech Spend Pulse as stipulated in the terms of the license.
Retail and eCommerce
A wide array of industry verticals is represented, led by financial services (21%), healthcare (10%) and retail and eCommerce (10%). Industries with less than 4% representation are included in the other category.
Transportation and logistics
Digital transformation, cybersecurity and cloud/cloud migration are top priorities, growing more so year-over-year. These top three initiatives are identical to last year and all have increased significantly over the past 12 months.
Both the 2021 and 2022 IT spending surveys included questions about the known impacts of the COVID-19 pandemic and how these will affect digital transformation activities. The negative impacts (such as lower revenue/profits at my organization and general economic downturn) all decreased significantly compared to previous years. Conversely, the more positive impacts such as higher budgets at organization, higher revenue/profits at organization and increased demand in our industry all increased significantly.
When asked about level of IT spend, more than three-quarters (77%) of respondents indicated their organizations spent more than $25 million USD annually on IT, with 14% spending more than $500 million USD annually.
Overall, IT organizations spend 8% of their revenue on IT. Those in the Americas spend at a rate twice that of their European counterparts (10% vs. 5%). Organizations with 2,001-5,000 employees spend a considerably higher percentage (10%) of their revenue than the largest organizations (6%).
As expected, technology companies spend more of their revenue on IT since they focus on innovation. Product-related industries spend less on IT because they focus on producing physical goods.
Please note: In a follow-up survey fielded after sanctions were imposed on Russia due to conflict in Ukraine, expected increase in budgets decreased by 7%, as shown in the graph labeled “Percentage of respondents expecting a change in their IT budgets.”
As organizations shift to the cloud, many are attempting to reduce the number of data centers they own and operate. Ten percent plan to eliminate data centers completely and 51% plan to reduce their data center footprint to some degree.
COVID-19 continues to drive up cloud spend and drive down on-premises software spend. Organizations turn to SaaS and move more apps and data to the cloud to support remote employees. These trends are continuing as budgets for items more directly related to enabling a remote work force increase, such as SaaS (69%), public cloud (59%) and desktops/laptops (55%). Conversely, spending associated with legacy office environments has decreased, such as data centers (-27%), servers (-28%) and on-premises software (-27%).
As IT spend moves more toward SaaS, cloud and other non-on-premises expenditures, visibility into that spend becomes more challenging. This includes keeping track of all IT assets in the organization and keeping track of how much the business is spending on those assets.
IT organizations often face challenges managing and optimizing the cost of services they deliver to the business. The top four spend-optimization challenges continue to be led by too many manual processes. But this year, negotiating best price/discount and increased prices from vendors moved into the top group, each increasing 10% or more from last year. This shows interactions with vendors will gain importance as organizations move toward the subscription-based model.
When respondents were asked about their current and future use of leading technology vendors across traditional on-premises software, SaaS and public cloud, Microsoft continues to dominate the top spot. Another 22% say Microsoft is their second largest vendor based on spend. Both Oracle and SAP made gains (Oracle up to 15% from 6% last year, and SAP up to 13% from 6%), closing the gap with AWS.
COVID-19 accelerated a push to a remote workforce. But as the world slowly starts to reopen, more IT workers are either returning to the office or working remotely less often. In last year’s survey, 45% of IT staff worked remotely full-time. This year that number has dropped to 29%.
The pandemic and the ensuing Great Resignation forced organizations to rethink their investments in IT staff. Investment in remote workers remains at the top, but both the upskilling of existing employees and re-skilling of existing employees are top of mind as well.
The distribution of the European respondents by organization size closely mirrors the global respondents. More than half (51%) of European respondents are from organizations with more than 10,000 employees.
In the breakdown of European respondents by industry, financial services and retail and eCommerce are the most represented industries, similar to the global respondents.
European respondents were asked for their top three priorities for technology initiatives. Agility/automation was chosen by 36% of the European respondents vs. 24% globally, and reduce technical debt was selected by 37% vs. 27% globally. This implies that European organizations are more focused than global respondents on automating their IT processes, and reducing their technical debt as a result of automating their existing (and possibly manual) processes.
For European organizations, COVID-19 continues to drive cloud spend up and on-premises software spend down. Budget impacts for European respondents closely align with those of global respondents as budgets for items more directly related to enabling a remote workforce increase, and budgets associated with on-premises resources have decreased.
European organizations faced similar challenges in IT spend visibility as global organizations. European organizations differed the most in reporting on IT spend by project/ program (48% vs. 41% globally), and reporting on IT spend by vendor (30% vs. 36% globally). This may be due to European organizations focusing more on initiative-based reporting than vendor/product-based reporting.
The vendors European organizations spend their IT dollars on are similar to global organizations, with notable exceptions. Microsoft holds the top spot for European organizations, with 69% indicating it’s their largest vendor by spend, compared to 58% globally. SAP and AWS round out the top three (with the order reversed globally). However, in the fourth spot IBM/Red Hat appears with 51% of European organizations ranking it in the top three vendors by spend vs. just 41% globally.
The COVID-19 pandemic altered the work environments of European IT staff much as it did global IT staff. While many of the data points shown closely relate to the global values, there’s a significant difference in full-time with partial remote (1-4 days per week work from home) with European organizations having 26% of their staff working in this model vs. just 16% globally.
The Flexera Tech Spend Pulse survey was undertaken before global sanctions were imposed on Russia due to actions taken in Ukraine. As a result, we followed up with 411 respondents to gauge the effect of these global events on IT spend.
We see that a considerable percentage of IT spend—53%—is allocated to software and related assets, including SaaS, IaaS and PaaS. This represents a steady overall investment compared to 2021 (54%), however, SaaS has increased significantly from 10% to 19% from 2021 to 2022.
Also notable, people and services makes up the greatest investment for IT organizations at 25%.
Expected change in overall IT budget shifted with slightly and significantly increase dropping from 71% to 64%. This included 16% of respondents expecting a decrease in IT budgets overall (vs. 12% in the first survey). Of note, 20% of respondents expected no change in their budgets (compared to 17%), which may indicate that original expectations remain on projection.
Expected change in technology investments saw movement away from the center (no change), with significant expansion on public cloud (IaaS/PaaS) at 71% (vs 59% as a result of COVID-19), and SaaS (72% vs 69%), and a reduction in expected decreased spending on servers (25% vs. 28%).
When looking at the expected change in specific vendors and their offerings, Microsoft showed the highest percentage of increase across all categories (licensed software, SaaS and cloud), followed by Adobe licensed software. The highest decrease in investment was expected in Oracle licensed software.
As the pace of change accelerates, it’s becoming harder for organizations to keep up. But those that leverage data are making the most impactful and successful decisions.
Companies need a unified view of their IT assets, connections, dependencies, license positions and optimization opportunities in order to maximize their return on IT investments.
Tech spend is key to powering the business initiatives that drive revenue and growth for the organization; effective adaptation to a changing technology environment creates consistent and efficient tech spend.
Tech spend continues to rise in the cloud and drop in on-premises software as organizations turn to SaaS and update infrastructure to support remote working. As we’ve seen with the Great Resignation and across the globe, workforces are adapting, and we expect those trends to continue as budgets continue to skew toward increases for SaaS, public cloud and remote IT devices like laptops and away from data centers, servers and on-premises software.
The top three priorities—digital transformation, cybersecurity and cloud/cloud migration—remain constant from the Flexera 2021 State of Tech Spend Report findings. And it’s likely these priorities will continue into 2023 as these all showed significant increases from 2021.
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