How COVID-19 will affect 2021 IT budgets

A company’s competitive advantage comes from its capacity to innovate. With 2020’s IT budgets largely reconfigured to address challenges associated with the pandemic, CIOs must look to 2021 spending as they consider digital transformation initiatives. The pressure is on to make a compelling case for technology budgets in 2021.

But budget concerns are likely to extend well into the year ahead as businesses adjust to the pandemic’s lasting impacts, and CIOs struggle to secure capital expenditures (capex) budgets that strike a balance between Covid-19-related challenges and enabling innovation.

But the thing is, the global COVID-19 crisis is a catalyst for change, spurring businesses to continue to invest in technology to support and secure a remote workforce, despite slowing corporate revenue growth resulting from the pandemic.

And as IT budgetary planning for 2021 has already started, many organizations are seeing the impact of COVID-19 on their IT priorities and tech spends.

The survey

How COVID-19 influences IT budgets and where exactly businesses plan to spend their tech dollars was the topic of a recent TechRepublic Premium survey.

The survey asked the following questions:

  1. How much do you anticipate your organization’s fiscal or calendar year 2021 budget will be?

  2. How has the COVID-19 crisis affected your fiscal 2021 budget planning?

  3. How has the COVID-19 crisis affected your IT priorities?

  4. Who in your organization makes initial recommendations for items in the IT budget?

  5. What percentage of the overall corporate budget is allocated to IT?

  6. What percentage of corporate technology spending comes from outside the IT budget?

  7. What are your organization’s top budget priorities for fiscal calendar year 2021?

  8. How can IT vendors better assist you with your budgetary process?

IT budget allocation

The uncertainty of COVID-19 factored into many respondents’ IT budgetary plans. Last year, 9% of survey respondents were unsure of their IT budgets, that number grew to 20% of this year’s respondents. Further, almost two-thirds of survey respondents (62%) said that they will tighten their 2021 IT budgets as a consequence of COVID-19.

62% of survey respondents will tighten their 2021 IT budgets due to COVID-19, reports a recent TechRepublic Premium poll.

Moreover, in 2020, the majority of survey respondents (76%) reported that their IT budgets comprised 10% or less of their organizations’ total budgetary spending. In 2021, that number dropped slightly to 71% reporting that 10% or less of the overall corporate budget will be allocated to IT.

This means that 6% more organizations are in fact allocating more than 10% of their budgets to IT in 2021!

IT budget priorities

While security (17%) and cloud services (16%) remain top IT budget priorities for 2021 similar to the previous year, remote technology that enables employees to work from home, digitalization, and employee training are gaining traction, as 13% of respondents ranked it a top priority.

Security and cloud services remain the top IT budget priorities, while remote technologies are gaining traction.

The priorities for 2021 IT budgets represent a slight departure from 2020 survey results where respondents said security (63%), internal hardware purchases (48%) and cloud services (48%) were the top concerns. In addition, 26% of respondents reported that they will spend more on remote technologies that enable employees to work from home, 22% will spend more on security, 19% said most of their IT staff will work from home permanently, and 17% will postpone major projects. Only 6% of respondents said that COVID-19 has not affected any of their company’s IT priorities.

IT budget decision makers

IT managers are making fewer budget decisions than in the past. Last year, 54% of respondents ranked IT managers as the top IT budget decision maker. However, IT managers are making IT budget decisions for only 23% of this year’s survey respondents, and instead, decision-making responsibilities are shifting to either the CEO/CIO or other C-level business managers, according to 46% of respondents.

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