Market & Sourcing
2022 IT budgets: aiming higher
by Karsten Tampier
IT budgets are aiming upwards in 2022, at least according to companies' plans towards the end of the previous year. No wonder that the self-confidence of many IT managers is very high.
At an average of 6.8 per cent of revenue, IT budgets for the current year are quite high, according to the Metrics study "2022 IT Agenda". In the past two years, it had amounted to around 4.3 per cent. The positive trend is mainly due to the fact IT budgets increased by an average of 8.9 percent in 2022. A certain influence on the development of the ratio, of course, is also likely to be due to declines in turnover. However, the share of companies which have calculated declining IT budgets for 2022 has shrunk significantly from 17 to 10 per cent compared to the previous year.
The coming months will show whether plans are sustainable in the face of geopolitical turmoil. In addition, the key figure "percentage of turnover" must always be evaluated with a view to the industry, because for example, banks and construction companies are worlds apart. IT budgets have the largest share of turnover in the IT/telecommunications sector, in public administration including defence, and in the consulting and service sector. At the lower end of the scale are automotive manufacturing and automotive suppliers, construction and consumer goods including food and beverages.
2022 IT priorities
There is consistency in the strategic priorities for 2022: security, digitalisation and recruiting qualified IT staff - at the top are three complex tasks which should keep the IT system active and stable. While security and digitalisation have been at the forefront for years, the search for IT experts is one of the rising stars and key to achieving the other goals. But automation has also moved into the top group as a newcomer. Not surprising, since it also promises positive effects for digitalisation, costs, agility and skills.
Outsource infrastructure, bring in applications
Long-standing trends are continuing in the in-house production of IT. Many companies (again) consider the development and management of applications as a core competence - in contrast to IT infrastructure, which is slowly but surely being outsourced to service providers or the cloud - even though it does not seem as if IT infrastructure will ever be completely outsourced. Currently, about 55 per cent of services in this area are provided internally.
IT managers with a lot of confidence
The higher demands as a result of the pandemic have strengthened the position of corporate IT and put its importance for organisations in the spotlight. The self-confidence of IT managers has not suffered as a result, on the contrary: as many as 92 percent of the respondents now rate the contribution of IT to the company's success as high or very high. The median is five out of six possible points. Thus, half of all study participants describe the value contribution of IT as "very high". This was not always the case: In our "2017 IT Agenda", 22 percent of the participants referred to their own IT as a "cost factor".
The increasing importance of IT for corporate success is certainly also due to the fact that IT has moved out of the offices and into production and products. Take the automotive industry, for example: in-car entertainment, over-the-air updates and autonomous driving would be unthinkable without IT, and such services are now important criteria for marketing and purchasing decisions.