Tech Budget Economics: It’s Ok To be Bullish
- By Stefan Hammond
- September 12, 2022

Outlining a tech budget gives some CDOs fits. The CSO and CISO want immaculate security. The marketing gurus want analytics. And bosses demand seamless user experiences.
Never mind supply chain issues, COVID-19-related issues, or the situation in Ukraine. In the words of John-David Lovelock, research vice president at analyst firm Gartner: “This year is proving to be one of the noisiest years on record for CIOs.”
“Geopolitical disruption, inflation, currency fluctuations, and supply chain challenges are among the many factors vying for their time and attention,” said Lovelock. “Yet contrary to what we saw at the start of 2020, CIOs are accelerating IT investments as they recognize the importance of flexibility and agility in responding to disruption.”
On the face of it, that's a positive development. Flexibility and agility are essential, but CDOs charged with IT budget responsibilities must take a proactive view of their tech strategy and demonstrate good stewardship of the firm's resources.
Demonstrating consistent value-for-money in IT budgets is an art, not a science. And it's always a good practice to remain aware of spending trends in this sector.
Budgets expected to grow
On April 6, research firm Gartner issued a press release that forecasts worldwide IT spending to reach USD4.4 trillion in 2022, up four percent from 2021.
Gartner said that inflation rates, geopolitical disruption, and talent shortages [are] not expected to slow IT investments this year. “As a result, purchasing and investing preference will be focused in areas including analytics, cloud computing, seamless customer experiences, and security,” said Gartner's Lovelock.
CDOs charged with IT budget responsibilities must take proactive views
Hardware follows a different curve, according to the research firm. “Inflation impacts on IT hardware (e.g., mobile devices and PCs) from the past two years are finally dissipating and are starting to spill over into software and services,” said Gartner. “With the current dearth of IT talent prompting more competitive salaries, technology service providers are increasing their prices, which is helping to increase spending growth in these segments through 2022 and 2023.”
Software and services are tipped to experience take-up, according to the firm: “Software spending is expected to grow 9.8% to USD674.9 billion in 2022, and IT services are forecast to grow 6.8% to reach USD1.3 trillion.”
The APAC situation
The Asia-Pacific region experiences perennial tech/business mini-typhoons ranging from ongoing quarantine restrictions to currency fluctuations. Yet research firm IDC sees growth in APAC enterprise tech spending, although consumer tech spending is down in the first half of this year.
“IDC forecasts Asia/Pacific ICT spending to grow by over 3.8% in 2022 and is expected to reach USD1.4 trillion by 2026 with a compounded annual growth (CAGR) of 5.2% by the end of 2026,”said IDC in a statement. Consumer technology spending in Asia/Pacific is hit, with growth slowing in 1H2022. “However, enterprise technology spending, including service providers, remained strong.”
Supply chain constraints have hit weak points across APAC
"ICT spending in the region has moved from exuberant growth last year to that of strategic growth," said Vinay Gupta, research director, IT Spending Guides, IDC Asia/Pacific. "Technology budgets are stable as of now. However, leaders will place greater scrutiny on technology investments as they represent a much larger share of spend and also to allow them sustainable business growth."
Defining the precise borders of the diverse Asia/Pacific region is never an easy task. Inter-ASEAN economies have their parameters, as do the larger countries of northeast Asia.
As IDC notes, many Asian economies “are net importers of energy and commodities and are facing the brunt of increased imported inflation due to the weakening of the local currency.” However, the research firm said that “Indonesia and Australia, which export commodities such as coal, oil, and gas, have benefited from the current situation.”
However, supply chain constraints have hit weak points across the region, and China's zero-COVID-19 policy (with its sporadic attendant lockdowns) has exacerbated the situation. “With China as their largest trading partner, many Asia/Pacific countries were hit...[but] IDC assumes that the Chinese economy will stabilize and return to growth in 2023.”
"As economic uncertainties slowly set into the [Asia-Pacific] region, government initiatives in each country continue to fight back by complementing macroeconomic stabilization measures," said Mario Allen Clement, associate research manager, IT Spending Guides, IDC Asia/Pacific. "Enterprises may continue to focus on operational efficiency. However, new initiatives may be stalled."
Among APAC market sectors, “education is expected to grow slower in 2023 as IT investments may be stalled due to excess and sudden spending in 2021, followed through in 2022,” said IDC. “Wholesale is expected to have a higher bounce back as budgets focus on improving omnichannel selling, growing commerce ecosystems, expanding into global markets, inventory transparency, and automation.”
Long-term strategy
Looking forward and backward along the time continuum is an essential exercise for all CDOs. “The rise of enterprise application software, infrastructure software, and managed services in the near and long term demonstrates that the trend toward digital transformation is not a one- or two-year trend; rather, it is systemic and long-term,” said Gartner. “For example, infrastructure as a service (IaaS) underpins every major consumer-focused online offering and mobile application, accounting for a significant portion of the almost 10% growth in software spending in 2022.”
The research firm said it “expects digital business initiatives such as experiential end-consumer experience and optimization of the supply chain to push spending on enterprise applications and infrastructure software into double-digit growth in 2023.” As for events in Ukraine, they're “not expected to have a direct impact on global IT spending. Price and wage inflation compounded with talent shortages and other delivery uncertainties are expected to be greater impingements on CIOs’ plans in 2022 but will still not slow down technology investments.”
“CIOs anticipate having the financial and organizational ability to invest in key technologies throughout this year and next,” said Lovelock. “Some IT spending was on hold in early 2022 due to the Omicron variant and subsequent waves but is expected to clear in the near-term.”
“CIOs who keep their eye focused on key market signals, such as the shift from analog to digital business and buying IT to building it, as well as negotiate with their vendor partners to assume ongoing risks, will fare better in the long-term. At this point, only the most fragile companies will be forced to pivot to a cost-cutting approach in 2022 and beyond.”
Stefan Hammond is a contributing editor to CDOTrends. Best practices, the IoT, payment gateways, robotics and the ongoing battle against cyberpirates pique his interest. You can reach him at [email protected].
Image credit: iStockphoto/fizkes