IT Budgets To Grow Cautiously in 2025, AI Training a Big Priority

Projected IT budget growth for 2025: Despite economic uncertainties, most IT leaders anticipate moderate increases in their organizations’ IT budgets for the upcoming year.

• Over 90% of IT decision-makers expect budget increases, with the majority projecting growth of less than 10%.
• Only 8% of IT leaders foresee budget increases exceeding 10%, indicating a cautious yet optimistic outlook for the sector.
• These projections come amidst various economic challenges, including inflation, fluctuating interest rates, global tensions, and upcoming elections.

Budget allocation and investment priorities: Personnel and software remain significant components of IT budgets, with increased focus on emerging technologies and employee development.

• Personnel costs account for approximately 35% of IT budgets, with organizations investing more in employee training, particularly in AI and other key technologies.
• Software expenditure comprises about 21% of budgets and is expected to grow at an annual rate of 10.5% through 2027.
• Some companies, like SnapLogic, are making substantial investments in AI initiatives across various departments, including finance, sales, marketing, and HR.

Diverse approaches to budget management: Companies are adopting varied strategies to manage their IT budgets and investments in the face of economic uncertainties.

• While some organizations are making significant investments in AI and other emerging technologies, others are taking a more cautious approach.
• Cautious strategies include breaking long-term projects into smaller, more manageable pieces and maintaining flat budgets to navigate economic uncertainties.
• CIOs are advised to focus on key areas such as data cleanup, implementing AI guardrails, reducing cloud sprawl, automating manual processes, and evaluating VMware spending to optimize their budgets.

Sustainability and vendor evaluation: Environmental considerations are becoming increasingly important in IT budget decisions and vendor selection processes.

• Many CIOs are now evaluating potential vendors based on their green initiatives and sustainability practices.
• This shift towards sustainability reflects a growing awareness of environmental responsibility within the IT sector and its potential impact on long-term business strategies.

Balancing innovation and caution: IT leaders are striving to find the right balance between investing in innovative technologies and maintaining fiscal responsibility.

• The focus on AI and employee training in new technologies demonstrates a commitment to staying competitive and future-ready.
• At the same time, the cautious approach to budget increases and project management reflects an awareness of potential economic challenges ahead.
• This balanced approach allows organizations to pursue innovation while mitigating risks associated with economic uncertainties.

Broader implications for the tech industry: The projected IT budget trends for 2025 offer insights into the overall health and direction of the technology sector.

• The widespread expectation of budget increases, albeit moderate ones, suggests continued growth and investment in the tech industry.
• The emphasis on AI, software, and employee training indicates areas where we may see significant advancements and competition in the coming years.
• The focus on sustainability in vendor selection may drive increased innovation and competition in green technology solutions within the IT sector.