IT budgets shift away from capital expenses thanks to the cloud

IT organizations are enjoying a slow but steady increase in budgets, but their capital expenses and hiring trends are essentially flat, reflecting the effect of the shift to cloud computing. 

That’s the takeaway from Computer Economics’ annual IT Spending and Staffing Benchmarks study for 2017/2018. The study finds that the greatest effect has been a decrease in the total amount of spending that goes toward the capital budget.

“Unless you are an IT equipment manufacturer, this is good news,” said David Wagner, vice president of research at Computer Economics in a statement. “The cloud transition is far from over, and we’re already seeing more efficient IT departments, particularly on a cost-per-user basis, which is at a new low. Business applications and network infrastructure are the top areas of new IT spending, while the data center, for the first time, is at the bottom. We take this as a sign the cloud transformation is continuing in earnest.”

IT capital spending drops to 18 percent 

IT capital spending has gone from 24 percent of total IT spending in 2013 to 18 percent in 2017, a significant drop in just four years. Computer Economics found that capital spending has held steady while operational budgets have grown, leading to capital budgets making up a smaller portion of the pie.

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