In July we published findings from our annual Senior Leadership IT Investment Survey. Fielded in June, the survey explored investment and adoption plans in key areas including cloud computing, collaboration and hybrid work, as well as critical and emerging technologies such as machine learning and extended reality (XR).
We polled 1,123 IT leaders, with over 50% holding the position of chief information officer (CIO) or chief technology officer. Respondents were predominantly from large organizations in the US and Europe, across a range of industries.
This article underscores the most significant highlights from the survey and what they mean for businesses and IT decision-making. The full report is available to clients now; non-clients can contact us for access.
IT Investment Continues Even as Macroeconomic Conditions Start to Bite
Over 80% of businesses expect their IT investment to increase over the next 12 months, as digital transformation remains imperative, supporting post-pandemic recovery and protecting against future disruptions. However, with a looming global recession, the overall picture is less rosy than in 2021. For example, the proportion of businesses expecting an increase of more than 15% in their IT investment is down by about a third from a year ago.
Businesses are already facing several IT challenges that are worsened by economic conditions, including difficulties in hiring and retaining top talent, rising costs and delays in hardware deliveries. More than 40% of businesses predict delays to IT projects, and almost as many expect to outsource some IT services and apps in the coming months as they juggle budgets and resources.
Security remains the top priority for IT investment, cited by 33% of IT leaders, continuing a trend we’ve seen for several years now. Cyberattacks, phishing, malware and ransomware and unsecured Internet-connected devices lead businesses’ security concerns, all of which have been exacerbated by the increased number of attack surfaces with remote and hybrid working. As shown in the chart below, investment in IT operations and service management was highlighted by 27% of leaders, edging ahead of cloud services at 26%, fuelled by the increased maturity of digitization in many organizations and the need to support newly deployed apps and digital services.
Cloud and Artificial Intelligence Enter the Mainstream
The accelerated transition to the cloud brought on by the pandemic continues, with businesses viewing it as vital for resilience and agility. Based on our survey findings, we estimate that almost half of all workloads are now hosted in the cloud, up more than 25% in two years. And businesses remain bullish about the continued pace of migration, expecting 73% of workloads to be in the cloud by mid-2025.
Microsoft remains the most widely used cloud provider, adopted by 64% of businesses. When choosing a provider, IT leaders prioritize ease of use and support for multicloud and hybrid cloud deployments, both highlighted by 33%. The importance of multicloud and hybrid cloud comes through clearly in our data, with 76% of businesses now having more than one cloud provider, up from 55% a year ago.
Another technology to graduate from the realm of emerging tech is artificial intelligence (AI). Almost 60% of businesses have now deployed AI applications in production, up from just 45% in 2021 as AI increasingly underpins every area of software-based innovation. However, this increased pervasiveness also brings challenges, with trustworthiness of systems highlighted as the leading concern, cited by 31% of decision-makers. This need to trust AI recommendations to be accurate and unbiased is in turn prompting a stronger focus on explainability in AI systems, giving business decision-makers — and other stakeholders, including customers — the confidence that the technology is adding value, and not reducing the transparency of decision-making.
Majority of the Workforce Is Now Hybrid or Remote, and Is Set to Stay That Way
IT leaders consider modes of working to have largely stabilized post-pandemic. Full-time office work still plays a prominent role, with 40% of the desk-based workforce now back in the office full-time according to IT leaders, and this is expected to remain consistent to 2024. The counterpoint to this is that 60% of the workforce are now hybrid or full-time remote workers, therefore the majority employee type when it comes to IT planning and workforce support.
It’s interesting to compare these findings with the desires of employees; our Employee Workplace Technology Survey, 2022 showed that although employees agree that hybrid work is the way forward, only 12% of desk-based workers want to work in an office full-time. This signals potential challenges for businesses if employees decide to look elsewhere for a role that better suits their preferences.
Against the backdrop of “the great resignation”, the problem of recruiting and retaining top talent is increasingly top-of-mind for businesses, shining a spotlight on the employee experience. Although employees rarely call out technology experiences as a leading problem, this is often prioritized by businesses as an easy area to tackle in the pursuit of better employee experiences.
At the top of businesses’ investment priorities in this area is digital experience monitoring technology, with 41% of businesses planning to invest in these tools in the next 12 months. In addition, 40% expect to purchase work management tools to support coordination of work in a hybrid era, and 38% plan to invest in workflow automation tools to reduce repetitive, boring tasks for employees and make room for more valuable and rewarding activities.
Metaverse Hype Inflates Expectations
Almost exactly one year after the term metaverse hit the headlines with Facebook’s rebranding as Meta, the media hype continues to influence perceptions. Our survey shows that 53% of businesses believe the metaverse will have a significant impact on their business in the next five years, with only 6% expecting no impact at all.
Definitions of the metaverse vary widely, from simply being another way of describing XR to heralding the next generation of the Internet. The most popular scenarios for where it will deliver business value are employee engagement, collaboration and training and data visualization — each of which are achievable today with XR or immersive technology, suggesting that most IT decision-makers conflate the metaverse with XR.
IT Transformation Is Now a Business Imperative
IT investment remains a priority for businesses, even as concerns grow about the global economy. The role of technology, not just in day-to-day operations but in helping businesses innovate and differentiate, has never been clearer, with businesses recognizing the need to protect IT spending as other areas face squeezes.
The transition to the cloud — helping businesses to outsource various IT functions, scale up their operations and accelerate their rate of innovation — remains paramount, and is becoming a necessity to compete in many industries. Similarly, although some firms try to resist the shift to hybrid working, employee demands and stronger competition for the best talent will force them to embrace it and build this new way of working into their strategy and investment plans.
These are now entry requirements for business, and this means that IT investment must become an increasingly large slice of the overall pie, with the CIO role becoming correspondingly more powerful. However, IT investment isn’t immune to the economic climate, and pressure to demonstrate a clear business case that aligns to strategic business goals will be greater than ever. The next three years will see huge transformational change in businesses, but we can expect IT spending to be carefully scrutinized. There will be no blank cheques for digital transformation.
A version of this article was first published on ReWorked on 24 August 2022.
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