2024 State of IT:
Detailed IT Budget Breakdown
In our State of IT research we reported that IT spending is expected to grow by 6% in 2024, with two-thirds of organizations planning to increase IT budgets compared to only 4% planning to decrease.
While we’ve already offered many insights on IT budget trends, there’s much more to cover. For example, we already shared that 66% of businesses plan to increase IT spending in 2024 vs. 4% that plan to decrease. A closer analysis of IT spending by industry reveals that organizations in the financial services (81%) sector are most likely to increase budgets in 2024. The industries most likely to decrease IT budgets in 2024 include education (15%) and government (18%).
In this detailed spending breakdown, we’re diving deeper into technology investment plans for 2024. This year we’ve expanded the number of IT categories we’re tracking — based on the Technology Business Management (TBM) framework — to give you a more accurate look into budget allocation across hardware, software, IT labor, hosted/cloud-based services, managed services, telecommunications, facilities and power, and internal services.
Note: Figures are reported as a percentage of overall budgets (i.e., companies spend 20% of their IT budget on hardware, on average) or as a percentage of spending within a category (i.e., laptops account for 21% of a company’s hardware spending, on average). Because of rounding, sometimes mean values within a category do not add up exactly to 100%.
Here’s how IT professionals told us their organizations plan to spend on technology in 2024, including additional insights on IT spending plans by company size.
- Small businesses (<100 employees) are expected to spend a significantly larger proportion of their IT budgets on hardware (24%) than mid-size organizations (100-999 employees) at 19%, and enterprises (1000+ employees) at 16%.
- Compared to SMBs (<1000 employees), enterprises (1000+ employees) spend a greater proportion of their IT budgets on facilities and power (9% vs. 7%) and internal services (7% vs. 5%).
- In small businesses, more than a quarter of hardware spending is going towards laptops (26%) vs. 21% in mid-size organizations and 18% in enterprises.
- Small businesses spend a significantly greater proportion of on-premises/local software budgets (12%) on productivity software than enterprises (8%).
- Enterprises spend a significantly greater proportion of on-premises software budgets (7%) on communications software than SMBs (4%).
- The smaller a company is, the more it tends to spend proportionally on experienced IT employees’ salaries. On average, 44% of IT labor spending goes towards senior IT employees’ salaries in small businesses, compared to 36% in mid-size organizations and 30% in enterprises.
- As is the case with on-premises software, SMBs (<1000 employees) also spend a significantly greater proportion of cloud budgets (13%) on cloud-based productivity software than enterprises (6%).
- Small businesses spend a significantly greater proportion of cloud budgets (12%) on web hosting than mid-size organizations (7%) and enterprises (6%).
- Proportionally, mid-size businesses spend significantly more on managed print services (6%) than enterprises (4%) or small businesses (3%).
- Enterprises (8%) and mid-size businesses (6%) spend proportionately more of their managed services budgets on managed wireless and mobile computing than small businesses (4%).
- Proportionally, small businesses spend significantly more of their telecom budgets on internet service providers (39%) than mid-size businesses (32%) or enterprises (27%).
- Small businesses spend a significantly smaller proportion of telecom budgets (13%) on wide area networks (WAN) compared to mid-size businesses (19%) or enterprises (21%).
- Small businesses spend a significantly greater proportion of their facilities budgets on utilities (28%) than mid-size (17%) or enterprise (14%) businesses.
- Proportionally, small businesses spend significantly more of their facilities budgets on power and climate (26%) than mid-size (20%) or enterprise (16%) businesses.
- Small businesses spend a significantly smaller proportion of facilities budgets (8%) on data center expenses compared to mid-size (12%) or enterprise (15%) businesses.
- Enterprises spend a greater proportion of their facilities budgets (12%) on racks, rails, cabinets, and cable management compared to mid-size (9%) and small (5%) businesses.
- Internal services represents the smallest spending category tacked in our study. Only 57% of organizations plan to allocate any IT funds to internal services in 2024.
- The smaller a company is, the less likely it is to bill IT for internal services. Only 33% of small businesses will allocate any of their IT budgets towards internal services, compared to 59% of mid-sized organizations and 72% of enterprises.
Where IT Departments Spend the Most
With the level of detail we’ve provided in these charts, it’s understandable if the dozens of line items we’re tracking make your head spin. If you simply want to understand where the bulk of business tech spending is concentrated, the following are the biggest line items, collectively accounting for more than one-third of IT budgets.
1. Internal senior employees (5+ years of experience)
2. Laptops
3. Internal mid-level employees (3-5 years of experience)
4. Desktops
5. Servers
6. Internet service provider charges
7. Internal junior employees (<2 years of experience)
8. External contractors
9. Networking (e.g., wireless, routers, switches)
10. Operating systems
11. Productivity software (e.g., word processor, spreadsheets, collaboration applications)
12. Security software (on-premises)
Note: Productivity software is somewhat of a special case, because it can be delivered on-premises or as-a-service. If on-premises and cloud-based productivity software spending were combined, that joint line item would be in the top five. Similarly, security software might also be delivered through multiple channels so it’s important to note that the list above only tracks on-premises security software.
Putting IT Spending Insights Into Perspective
Because we’ve gathered data from hundreds of businesses, comparing your 2024 budget plans against our figures can help your organization understand if your spending plans are aligned with those of your peers. At the same time, we understand that experiences vary depending on where you work and every business is unique.
That’s why we’ve provided multiple ways to look at data (e.g., callouts to statistically significant insights across industries and company size, comparisons of line items across spending categories). We hope these additional insights can be useful for benchmarking and the additional nuance we’ve provided helps make our report more relevant to your specific situation.
In the future, we plan to release more data and interactive assessments to make this report even more useful to you and your business. Thanks for reading this IT spending forecast, based on a Spiceworks study powered by Aberdeen Strategy and Research. For even more on tech adoption, tech careers, and how IT teams are performing across a variety of metrics, visit the 2024 State of IT report.
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