2019 budget outlook: This is the cloud's world and CIOs are just living in it
There is little worse than an IT budget locked in a chokehold. Companies lowballing budgets may not feel the sting immediately, but historically underinvesting in tech can lead to an expedient overhaul of leadership and an uncomfortable call with investors.
Incremental increases in IT budgets indicate a company is pursuing more innovative avenues while taking on competition.
Thankfully CIOs and other IT executives tasked with making the case for increased budgets are garnering more support from nontechnical leadership who understand the value of modern technology.
CIO Dive broke down Forrester's budget outlook for 2019. Here are the most interesting numbers:$1.8 trillion: Cumulative U.S. tech budgets in 2019
Budgets as a whole will see an average 6% increase year-over-year, 0.5% slower than last year, in line with expectations for U.S. tech market performance.
The risk of downturns are ever present, so tech execs have to have a plan in place as nontechnical leadership will call on CIOs for further cost savings.
"Balance — between innovation and caution, front- and back-office systems, and cloud and on-premises technologies — should be the theme for CIOs in 2019," according to Forrester.20%: The rate of cloud subscription growth in 2019
Cloud subscriptions will account for 40% of all application and middleware software expenditure.
Spending on applications and middleware software will reach $293 billion, with the bulk of it, $103 billion, dedicated to SaaS subscriptions.
However, single-hosted subscriptions will have slower 3% growth to $22 billion year-over-year. And for good measure, on-premise software license fees will increase by 8% to $53 billion and maintenance fees by 5% to $73 billion. This is due to on-premise software platform upgrades.2%: Decreased staffing rate
Cloud solution adoption has caused a decline in staffing. As companies more heavily rely on the cloud, database and network administrators, computer programmers and computer operators are in less demand.
Application engineers and "other computer occupations" will take center stage for hiring employers. Because the of the supply and demand problem of tech talent, companies can expect a 3% increase year-over-year in tech salaries.
As the cloud has greater impact across IT services, CIOs can expect $355 billion dedicated to staff spending, a 5% increase from 2018.$29 billion: Money spent on public clouds
Public cloud services like Amazon Web Services, Microsoft Azure and "others," according to Forrester, are the primary recipient of cloud vendor budgets. Private clouds like IBM and Oracle are expected to increase by 6% to $4 billion year-over-year.
But as companies heavily rely on public clouds "as a form of outsourcing," Forrester declares, "cloud giveth to outsourcing, and cloud taketh away." The cloud has revived application resourcing because companies may eventually exchange internal apps for cloud apps.
Outsourcing data management will account for the bulk of the spend at $27 billion, followed by application outsourcing at $18 billion. Computer hardware maintenance services are expected to cost the least at $15 billion for outsourcing.2 factors influence tech spending: Distribution and cloud adoption
Distribution of tech spending relies on the decision between dedicating funds to a new project or maintaining existing systems and technologies. It also depends on deciding whether or not to spend money on technologies that help "win" customers or for systems used exclusively in individual departments.
The cloud's fast adoption rate challenges the notion of a category's expenditure because it's present in software, tech consulting and systems integration, and tech outsourcing. Companies have to be comfortable with the fact that the growth of business tech and the cloud "reinforce each other.”
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