Why setting IT budgets for 2021 will be harder - and easier - than ever

It’s the time of year when many IT leaders will be setting budgets for 2021 and trying to persuade their boardroom why they should have more money to invest in technology. After the year we’ve all had, that task is looking easier and harder.

Everyone’s 2020 budget was blown away when the pandemic struck. According to Computer Weekly’s latest IT Priorities reader survey, 38% of organisations worldwide had to cut their budgets by more than 5%. Gartner’s latest IT spending forecast for Europe suggests budgets are down 6.5% overall – although that’s better than expected, since the analyst predicted an 8% drop back in May. And yet, according to the recent Harvey Nash / KPMG CIO survey, during the first three months of the crisis, IT budgets grew at a greater rate than at any point in history, equating to around $15bn per week.

So, everyone spent a load of money to get through lockdown, and then had their budgets cut for the rest of year to make up for that emergency investment – and then had them cut a little bit more. It doesn’t make predicting next year’s spending all that easy.

But our IT Priorities research – which we carried out originally in January, pre-pandemic, and repeated in September to compare results – offers valuable insights into what’s going on. Not surprisingly, spending on anything to do with remote working became the top priority. Even well-established, dull, low-growth technologies like unified communications shot up the list. But take those out, and the top areas for spending remained the same – infrastructure modernisation, cyber security, public cloud and digital transformation.

But that’s not all – it’s clear that those four areas have become even more important – investment has accelerated. Organisations are moving to the cloud faster, speeding up their digital transformation, enhancing security and updating networks at great pace. It’s become common to hear an IT leader say, “We’re doing in a few months, all the things we wanted to do in the next few years.” If you wanted a load of cash next year to buy some new servers, however, don’t expect a warm response from the CFO.

Next year will be the most difficult to predict that we have ever faced – who would ever have thought we would be where we are now 12 months ago? Budgets will be more scrutinised than ever out of an abundance of caution. But technology has proved it is at the heart of keeping businesses resilient through difficult times. Focus your spending on accelerating digital transformation, modernising your IT and migrating to the cloud, and the return on investment should brighten the mood in the boardroom.