Cloud & security top of IT investment agendas in 2021

With non-essential investment set to fall, how will CIOs be spending their budgets in 2021? We look at what the priorities are and where we’ll see the most investment (and why).

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CIOs look set to enter 2021 with a sense of optimism but a lot of caution. They have a balancing act ahead of them; one where they must expand IT while saving cash wherever possible.  

Forrester expects growth in IT budgets to be weak in the first half of 2021, then improve modestly in the second half, but some regions and businesses will fare better than others. Andrew H Bartels, VP and principal analyst at Forrester Research, notes that the UK tech market will be weaker than the US due to Brexit for example, but also that things look more positive for enterprises over SMEs.

“Overall the economic and tech market outlook will be brighter for large companies who’ve been able to borrow freely and cheaply than for SMEs who’ve borne the brunt of the recession but struggled to get financing. On average, enterprise tech spending will be up by 2-4% in 2021, while SMB tech spending is likely to be down by 5-10%,” he says.

The combined effects of Covid-19 and Brexit saw IT spending in decline by 6.5% across EMEA in 2020 says Garter, but analysts believe that as we enter a period of recovery, CIOs will again return their focus to digital transformation. The analyst firm forecasts EMEA spending to reach US$1.075 trillion in 2021; an increase of 2.8% on 2020.

“IT budgets hit a high in 2019 and suffered in 2020. The biggest change in 2021 will be how IT is financed, not necessarily how much it is financed,” says John Lovelock, distinguished analyst at Gartner. “As businesses complete product or service delivery digital business transformations, IT will underpin the delivery. That change shifts IT from being a cost centre, and being calculated as a percentage of revenue, to being a cost of goods sold,” he notes.

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