Amidst runaway inflation, rising Fed rates, supply chain disruptions, and continued negotiations on the future work model, it can be difficult to cut through the noise and easy to opine that doomsday is around the corner. Fortunately, ETR knows that “opinions only exist due to a lack of data.” To make sense of the evolving macro situation, and complement our quantitative data, we solicited feedback from eight executive IT decision makers in a series of one-on-one interviews and a group panel, featuring ETR Community Members in the following roles:
- Manager of Enterprise Information Security, Large Retail Enterprise
- IT Security Manager, Large Industrials Enterprise
- VP of Technology Services, Large Software Enterprise
- VP of Technology and Innovation, Large Metropolitan Transit Agency
- Director of IT, Large Technology Enterprise
- Director of IT Infrastructure, Global Financial Services Enterprise
- Director of IT Management and DevOps Engineering, Large Insurance Enterprise
- Chief Information Security Office (CISO), Global Hospitality Enterprise
Continue reading for a select overview of data from our recent July 2022 Macro Views survey, as well as an analysis of the targeted feedback we collected on the impacts of the current spending environment in IT, and how our guests’ organizations are reacting to the multifaceted situation on the ground as it unfolds. Read the full report on the ETR research platform HERE.
I. Macro Data Overview
In the July 2022 Macro Views survey, respondents indicated that Q3 IT spending growth will be largely in line with Q2 2022, reinforcing a material decline captured from December 2021 to March 2022 polling periods. Total 2022 spend is also in line with data from three months ago. Q3 and Q4 projections sit at +5.6% and +5.5%, respectively, with total estimated 2022 spend at +6.6% year-over-year (see Figure 1).
Cybersecurity remains the clear-cut highest priority for IT decision makers. Cloud migrations registered a notable decline in average ranking compared to the past two survey periods, putting it in line with collaboration and productivity and analytics and data warehousing (both of which are flat). Machine learning/AI shows the most material uptick in prioritization, though ranks second lowest, outpacing robotic process automation (RPA) (see Figure 2).
Among respondents indicating a decline in Q3 2022 spending vs. Q3 2021, 38% cited that their primary strategy for cutting costs is to consolidate redundant vendors (see Figure 3). To a lesser extent, other cost-cutting measures include reducing excess cloud resources (14%), reducing workflows in consumption-based services and tools (11%), and optimizing SaaS licensing (8%).
Fewer respondents cited they would be accelerating new IT projects or deployments over the next three months compared to March 2022. Those indicating IT project freezes increased over that same time period to 8.8%. These slowing project plans also appear to be impacting organizations’ IT workforces. For example, plans to increase hiring are at 45.6%, down nearly five percentage points. Plans to freeze hiring in the next three months also increased to 11.5%, and plans to layoff employees were slightly up, to 5%. On the bright side, the vast majority of respondents anticipate wage growth in their organization’s IT department, both for existing employees and new hires. For existing employees, 44% of respondents anticipated wage growth of 1-5%, 21% anticipated growth of 6-10%, and 8% anticipated more than a 10% increase. For new hires, 27% of respondents anticipated a 1-5% growth in wages, 26% anticipated growth of 6-10%, and 20% anticipate even higher growth in wages.
Most respondents anticipate hardware, insurance premiums, managed IT services, and utility costs to increase in the next six months, excepting real estate costs which also captured the highest declines (see Figure 4). Many also anticipate insurance premiums (43%) and managed IT services (43%) to stay flat, while few expect a decrease.
II. Supporting Commentary
Everybody’s looking at the Microsofts, Googles, Oracles, and SAPs of the world. If I have an enterprise agreement with one of these vendors, I can leverage a lot more technology and a lot more solutions without necessarily going to other sources for fine point solutions. There’s a huge benefit in leveraging a Microsoft agreement, and all the things that come with it, and not having to go to 15 different vendors for the same solutions. We are going down the path of looking at how to make sure that we are leveraging and taking advantage of the capabilities there, yet not putting ourselves in a bind should Microsoft go and raise prices by 20%.
- VP of Technology Services, Large Software Enterprise
Everyone recognizes that there's a huge market space out there, and a lot of folks want to opt for simplification and integration versus dealing with standalone, best-of-breed solutions. In some cases, depending upon what your business needs are, you can leverage that. In other cases, you can't. So based on your business complexities, you may have the ability to say, you know what? Now that Salesforce is offering all of these different features and functionality, I can start to look to them as a possible solution instead of looking in other avenues for things that I typically wouldn't have considered them for before. Now that being said, there's also the, well, do they have that functionality, and at some point in time will you need it? So there are tradeoffs. There are always tradeoffs. But at the end of the day, everyone recognizes that there's market share to be gained. If you can put together the right package of solutions, folks may be interested in going down that path, just because it's one place to go and it's a much simpler way to deal with things than having to deal with four or five different vendors. I can get most of my needs taken care of… Salesforce is the 800-pound gorilla for a reason. They have done it for a long time. They’ve done a really good job looking at where the market is going, listening to customers, and building features that customers need.
- Director of IT, Global Financial Services Enterprise
In a couple of cases, we had a business unit with a tool that there’s an equivalent somewhere else. We have a pretty good centralization of IT spend, not actually centralized control, but it all funnels in, and we try to put everything into one budget. So it makes it a lot easier to spot those kinds of things, rather than a lot of dispersed IT spending across different budgets and things that are really hard to spot.
- VP of Technology and Innovation, Large Metropolitan Transit Agency
III. Conclusion
IT decision makers continue to move forward with pre-existing projects, mostly as planned, and the macroeconomic situation has not yet had as much of an immediate impact as headlines portray. In fact, rising inflation may even contribute to greater investments. Still, our guests recognize the threat of further deterioration, and being mindful to consolidate, audit spend patterns, and reduce vendors when it makes sense for their business. Otherwise, the IT executives we spoke to are forging ahead with cybersecurity as the clear-cut top priority and increasingly undertaking projects involving machine learning, artificial intelligence, and advanced analytics.
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Enterprise Technology Research (ETR) is a technology market research firm that leverages proprietary data from our targeted IT decision maker (ITDM) community to bring you 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