Spiceworks: IT Spending to Rise 18% in North America, Europe in 2020

SPICEWORKS SPICEWORLD 2019 — Business IT spending across North America and Europe is expected to rise by an average of 18% in 2020 as businesses continue to work to replace old outdated technologies and solve other IT challenges, according to the latest annual State of IT study compiled by help desk and business networking vendor Spiceworks.

Of some 1,005 business technology buyers interviewed from a wide variety of companies from small to large, about 44% of the study’s respondents reported that their companies would be increasing their IT budgets by an average of 18% in 2020, compared to about 8% of the respondents who said their IT budgets will shrink.

Spiceworks’ Peter Tsai

“It’s good news for the channel,” Peter Tsai, senior technology analyst for Spiceworks, told Channel Futures here at the company’s annual SpiceWorld conference in Austin, Texas. “There should be more money out there to spend.”

Asked in the survey why they will be increasing their IT budgets in 2020, 64% of the respondents who said they will be raising their budgets said that the biggest driver for the move is to replace outdated infrastructure, said Tsai. Some 47% of the respondents who said they will spend more said it was due to increased security spending, while 47% also pointed to increased IT needs due to more employees and the need for more hardware and software licenses.

About 45% of the respondents who said they will spend more said the increases also will be used to boost increased priorities on IT projects, such as Microsoft Windows Server end-of-life initiatives.

The biggest areas where increased IT spending is expected by rankings is in hardware, software, the cloud and in managed services, said Tsai. About one-third of the expected increase will be seen in hardware, the report continued.

“We know from previous research approximately how much of that spending is going to go to channel partners,” said Tsai.

Earlier this year, the Spiceworks State of Servers report found that about one-half of all enterprise IT buyers buy directly from vendors, while about 46% of enterprises buy from VARs through the channel. Some 36% of small- and medium-size businesses with fewer than 100 employees typically buy from VARs, the report continued.

The top drivers for new hardware, software and services purchases in 2020 will be dealing with end of life products, which was mentioned by about 60% of the respondents; initiating refresh cycles, mentioned by about 56% of the respondents; and building out for business growth, mentioned by about 50% of the respondents, said Tsai.

“If channel partners understand the concerns of their clients, they can best know how to serve them,” he said. “They know how to help them.”

The annual 2020 State of IT study found that much of the new spending will help many businesses deploy cutting-edge technologies to replace outdated infrastructure while also addressing increasing IT security concerns. The 44% of businesses that say they will increase their IT spending in 2020 compares to about 38% that said they would increase their IT spending in the 2019 Spiceworks State of IT survey.

Also notable in the report is that some one in four enterprises surveyed said a recent security incident is responsible for their decision to increase IT spending next year, while only 4% of small businesses said that was a factor in their decisions.

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… another insight from the study – that emerging trends such as containers and AI – are on the minds of SMBs and enterprises as they plan their IT spending for next year.

“The channel should care about it,” said Tsai of containers and their increasing growth. “Smaller businesses don’t have as many resources because their IT offices are not as well-staffed and they don’t have as much money.”

Only about 18% of small businesses are using or experimenting with containers so far, compared to some 46% of enterprises, but those numbers are expected to continue to grow, he said.

“Maybe two or three years from now the smaller guys will catch up,” said Tsai. “It is definitely an emerging trend. And AI will be adopted more in the coming years,” with respondents in the study saying they expect 42% of companies to be using AI in the next two years, compared to 15% usage today.

“Businesses have a lot of questions about it,” he said. “Smaller companies, they wanted to know about cloud in the last few years. They got help from partners and then started using it.”

The same patterns are being seen with the slow adoption and interest in AI inside smaller companies, he said.

“Companies don’t know where to start” with AI, said Tsai. “Channel partners want to position themselves as trusted advisers on this stuff. If they can get their customers to trust them on it, they’ll keep coming back for that trusted advice.”

The top buyer pain points in these areas are identifying the right technology products to meet their needs, as well as comparing all the potential products side by side so they can be evaluated, he added.

“This is where the channel can help,” he said.

Spiceworks is a professional network of more than 7 million members who use the company’s online user support forums on a regular basis. The company, which is often referred to as the Facebook of the IT world, offers a variety of free help desk and other services that are widely used by businesses of all sizes. The free services are provided through an ad-supported business model.