Since March of 2020, ETR has been conducting a higher-level macro overview survey to determine overall spending budgets and trends impacting the enterprise technology landscape. In the January 2023 iteration, over 1,500 IT decision makers participated in the Macro Views Survey, weighing in on overall budgets, spending priorities, hiring trends and wages, cloud workloads, rate of new IT deployments, software procurement cycles, remote work, and much more. In addition, the macro survey also overlaps the higher-level spending direction with our vendor-specific TSIS data to see which vendors are impacted the most (and least) by directional spending movements. In this article, we will provide a glimpse into some of the key findings from Part 1 of the survey and ensuing data report dealing with IT budgets and the most often cited methods of reducing spending. If you want the full results, our clients and community members can find them on the comprehensive ETR platform. Or you can sign up for your free trial today to gain access, no strings attached.
Let's begin with the overall spending budget data (below). While no one has a crystal ball and predictions are not really what we do here at ETR, we do have something better; we have data from more than 1500 IT decision makers that told us what their planned spend for 2023 will be. As we all know by now, spending estimates are down across the board again in this survey. IT spend estimates for 2023 stand materially lower than respective estimates captured just three months ago. Projections for 2023 Q1 are at +2.9%, 2023 Q2 is at 3.6%, and Total projections for 2023 currently sit at 4.6%, down from the 5.6% projection captured by our survey sample just three months ago.
While 4.6% might not even keep apace with current inflation, it is undoubtedly much more optimistic than the current headlines, and giant research shops suggest. Furthermore, the ETR Insights team is hearing anecdotal support for this in our interviews as well: "Certainly, there’s budget pressure. Investments and projects are being deferred. It seems everyone trying to feel out the economic situation; are we actually heading into a recession?” However, we often hear from our end user community that the deferments tend to delay the pace of modernizing legacy tech debt without hindering existing business-specific tech investments. “I haven't seen a lot of pause in business-focused projects, in digital transformation, and in business enablement.”
As you can see below, despite the aggregate revision lower in spending estimates, Small organizations and EMEA respondents both revised spending higher and hold the two highest budget growth expectations across all samples (7.4% and 6.6%, respectively). Midsize firms also showed stability at elevated budget levels just below 6% growth. Meanwhile, the world’s largest companies seem to be buying into the headlines and show their ample trepidation with the steepest downward revisions in budget projections, as depicted in our data set by the Global 2000 and Fortune 500, where growth lands at 2.6% and 1.9%, respectively. By industry vertical, the world’s Energy & Utilities companies, flush with cash and playing catch up on decades of legacy tech debt, will be driving spending, whereas the usually high-budget Financials/Insurance organizations play wait-and-see on the looming recession with the biggest drop in expected y/y spending.
As you can see from the previous data illustrations, it s clear that many organizations are following orders to cut back on IT spend, which begs the question, exactly how do they plan to do that? As the recent headlines have shown us, layoffs are certainly one way to achieve cost savings, especially among the largest organizations that have historically shown a tendency to overhire on optimism and overcut on pessimism, but there also have to be operational initiatives to achieve reduced budgets. To learn more, ETR asked our community about their primary method to achieve a decrease in near-term spending.
As shown below, among respondents who indicated decreased IT spending in 2023, the most common method to rein in spending was consolidating redundant vendors across business units, being cited by 36% of the survey population. Reducing excess cloud resources (19%) came in second, and reducing workflows in consumption-based services and tools (14%) was the third-highest response. Optimizing SaaS licensing saw the sharpest decline, going from 13% of respondents back in October of 2022 to only 9% this period. Several respondents wrote in open-ended explanations to this question that commonly mentioned reduction in staffing and slowed hiring plans, cutting or delaying new equipment purchases and projects, and moving to outsource/offshoring solutions.
Ok, my boss just told me that's enough free data for one day...but I'm telling you, there is SO much more where this came from. I haven't even gotten started on the spending priorities, hiring trends and wages, cloud workloads, rate of new IT deployments, software procurement cycles, remote work, and vendor impact lists. That's not even touching ETR's vendor-specific syndicated surveys that cover over 700+ public and private technology vendors, nor is it factoring in the ETR Insights research that triangulates our data, commentary from our ITDM community of thousands of end users, and seasoned industry analysis. Oh, and did I mention our vast library of custom survey data and findings reports? You have no idea what you're missing out on, and all you have to do to find out is hit this free trial link, and it's all yours. Come on; give us a try.
Enterprise Technology Research (ETR) is a technology market research firm that leverages proprietary data from our targeted IT decision maker (ITDM) community to provide actionable insights about spending intentions and industry trends. Since 2010, we have worked diligently at achieving one goal: eliminating the need for opinions in enterprise research, which are often formed from incomplete, biased, and statistically insignificant data. Our community of ITDMs represents $1+ trillion in annual IT spend and is positioned to provide best-in-class customer/evaluator perspectives. ETR’s proprietary data and insights from this community empower institutional investors, technology companies, and ITDMs to navigate the complex enterprise technology landscape amid an expanding marketplace. Discover what ETR can do for you at www.etr.ai