The Cloud

Survey Sees IT Budgets Shifting to Cloud

IT capital spending is projected to remain flat in 2015, but IT operational budgets will increase.
Matthew HellerJune 17, 2015
Survey Sees IT Budgets Shifting to Cloud

While information technology operational budgets are rising at the fastest pace since the Great Recession, IT capital spending remains flat, a trend that may signal a shift to cloud computing, according to a new survey.

IT operational budgets are up about 3.0% at the median, the IT research firm Computer Economics said in the report, and 69% of organizations polled for the survey are experiencing budget increases this year. Only 17% were cutting their operational budgets.

But Computer Economics forecasts that as a percentage of revenue, total IT spend will decline this year, from 2.5% to 2.3%. And while 43% of organizations are increasing IT capital budgets in 2015, a nearly equal 37% are reducing capital spending.

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“It may be that IT investment is just lagging behind the general recovery,” the report says. “At some point, we should see IT spending catch up.

But another explanation could be that the transition to cloud technology is beginning to pay dividends and IT is becoming more efficient.

“There is a notable shift from IT capital spending to operational spending, which is exactly what we would expect as companies move from software licenses implemented on premises to cloud subscriptions,” Frank Scavo, president of Computer Economics, said in a news release. “Economic uncertainty is also at play, but we think the shift to cloud computing is the greater factor.”

According to the report, a net 56% of IT organizations currently are increasing spending on cloud applications compared with only 10% that are growing spending on data center infrastructure.

“Cloud computing will deliver real value to enterprises in lower cost of IT and higher service levels,” the report says. “The data [are] indicating that the cost of IT is declining on a per-user basis and as a percentage of revenue.”

In short, the survey concludes, “IT executives today are in a good position to think strategically, lobby for IT investment, and deliver real long-term value to the business. We are beginning to see the first signs that cloud computing is having a positive, if disruptive, influence.”

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