Spiceworks Ziff Davis Study Reveals the Impact of COVID-19 on IT Budgets and Emerging Tech in 2021

Despite stagnating revenues, 80% of businesses expect IT budgets to grow or remain steady next year

AUSTIN, Texas–(BUSINESS WIRE)–Today Spiceworks Ziff Davis announced its annual 2021 State of IT study examining technology budget shifts and emerging technology adoption trends in organizations across North America and Europe.

The findings show the global COVID-19 crisis to be 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. Of the more than 1,000 businesses surveyed, 76% plan on long-term IT changes as a result of COVID-19, and 44% plan to accelerate digital transformation plans.

However, with organizations looking to cut back on expenses, tech budget growth has slowed compared to last year. Among businesses taking part in the study, 33% plan to increase their IT budgets in 2021, compared to 44% in the prior year, while 17% of companies expect IT budgets to decline in 2021.

Similar to findings from previous waves, replacing aging IT infrastructure and growing security concerns will be among the biggest drivers of budget growth next year. But with more than half of businesses planning to retain flexible work policies permanently, the “remote work revolution” will continue to drive new spending. Among the businesses increasing IT spend in 2021, the following factors will influence budget growth next year: Increased priority on IT projects (45%), changes to business operations during COVID-19 (38%), and the need to support a remote workforce (36%).

“During the rush to remote work caused by the pandemic, it quickly became clear that technology is the glue that keeps businesses and employees connected,” said Peter Tsai, senior technology analyst at Spiceworks Ziff Davis. “With more people working remotely than ever before and face-to-face meetings out of the question, organizations wouldn’t have been able to maintain business continuity or keep productivity levels high without the many technologies companies rely on… including laptops, video conferencing, VPN, chat apps, internet connectivity, and more.”

Spending Shifts and Slowing Future Tech Adoption

As working remotely becomes the new normal, IT needs will shift. As in previous years, hardware will still account for the biggest portion of IT budgets in 2021. But as a percentage of total IT budgets, anticipated spending in this category has dropped significantly in the last two years — from 35% in 2019 to 31% in 2021 — as businesses increase cloud and managed services spending.

Additionally, while businesses will continue to invest in emerging tech, adoption plans are expected to drop significantly year over year, especially among smaller businesses, which will deprioritize cutting-edge features in favor of more pressing needs such as updating outdated infrastructure and securing a remote workforce.

At the same time, enterprises (1,000+ employees) will adopt select emerging technologies at up to 5x the rate of small businesses (1-99 employees) over the next two years, as is the case with Blockchain (9% current and planned adoption among small businesses vs. 53% among enterprises). Additionally, enterprises will adopt IT automation technology, virtual reality, edge computing, containers, 5G, and VDI at significantly higher rates than SMBs.

Methodology

The survey was conducted by Spiceworks Ziff Davis in June and July 2020 and included 1,073 business technology buyers from organizations across North America and Europe. Respondents represent a variety of company sizes, including small-to-medium-sized businesses and enterprises, in addition to a variety of industries, including manufacturing, healthcare, non-profit, education, government, and finance. For more information and a complete list of survey results, visit https://swzd.com/resources/state-of-it.

About Spiceworks Ziff Davis

Spiceworks Ziff Davis, a division of J2 Global, Inc., is a trusted global marketplace that connects technology buyers and sellers across verticals including IT, Marketing, HR, and Finance. Our quality and diversity of first-party intent data gathered from our contextually relevant media network helps tech brands target decision-makers across the buying collective. When combined with our integrated marketing capabilities, built on a deep understanding of the buyer’s journey, we enable tech brands to get unparalleled access to in-market buyers. For more information, visit www.swzd.com.