Show Me the Data: Aberdeen Experts Talk IT Spending in New Spotlight Series Meetup
Aberdeen conducted its latest Spotlight Series video meetup, ‘The State of IT Spend in 2024: Managing Choices and Tradeoffs’ to answer one of the most consequential questions for organizations today: how are organizations making choices and managing tradeoffs with limited funds available? Read on if you couldn’t tune in with Aberdeen’s Derek Brink and Mike Lock on January 31.
- Aberdeen Strategy & Research conducted its latest video meetup, where seasoned analyst Derek Brink shared his two cents on how organizations fare regarding IT spending.
- Speaking with Aberdeen’s Mike Lock, Brink answered how teams can pull in higher budget allocation and where IT spending is going today.
“You’ve never worked at a place that has an unlimited budget for IT?” asked Mike Lock, the principal managing director at Aberdeen Strategy & Research and the host of Aberdeen Spotlight Series’ The State of IT Spend in 2024: Managing Choices and Tradeoffs Video Meetup.
Derek Brink, CISSP, VP and research fellow at Aberdeen, “No. No, no, not once that I know of.”
And that’s the crux of the debate surrounding IT budget allocation and, of course, the basis of Aberdeen’s research: how are organizations making choices and managing tradeoffs with limited funds available?
Of course, there can’t be, and isn’t, a one-size-fits-all answer to organizations’ IT requirements. However, data collated by Aberdeen from 530 global organizations for The State of IT Spend in 2024: How Does Your Organization Compare? and analyzed by Brink offers an interesting perspective on how other companies approach IT budget allocation.
Once again, the basis of organizations’ decisions stands on the following three pillars:
- Enable and optimize the success of upside opportunities: Increase the revenue and profits.
- Improve operational efficiencies: Save unnecessary costs and time.
- Manage downside risks to an acceptable level: Avoid downtime losses from cyberattacks as well as penalties for privacy and cybersecurity non-compliance.
Brink believes value and outcomes are more crucial than technology and activities. Since outcomes are quantifiable, that’s ultimately what matters. This also translates into higher budgets, though it still won’t be infinite.
Organizations’ IT decision-making is now also a function of the prevalent trends. For instance, Brink recalled an incident from his days at RSA where an investment bank’s CISO’s staunch opposition to outsourcing cybersecurity stuck with him. “There’s two things you never outsource,” Brink recalls the CISO saying. “Security and common sense.”
It has been almost two decades, and cybersecurity outsourcing is commonplace across industries, along with multiple other technological aspects.
And as cybersecurity outsourcing became more acceptable, so did general IT spending as evidenced by workloads and data moving to the cloud. However, here’s where it gets interesting: for general IT spending, less than 5% of companies have resorted to a wholly in-house or outsourced computing infrastructure (hardware, software, facilities) and technical staffing. As the illustration below highlights, in-house strategy is here to stay despite the technological exodus to the cloud.
“Our colleague Jim Rapoza (research director at Aberdeen) was telling us that It wouldn’t have been crazy not that long ago to say everything is gonna end up in the cloud, and all the marketing people were saying exactly that, but he just finished some research and said, well, things are moving back in-house,” Brink noted.
“Some of it has to do with control and cost, and for certain workloads, you can make money by running them in-house and take control over what happens as opposed to being subject to the pricey models of the cloud providers. Things like that,” Brink opined.
In-house vs. Outsourced Computing Infra Adoption
Source: The State of IT Spend in 2024 (Aberdeen, Spiceworks)
The expectation is that next year, the pendulum will have shifted more towards in-house strategies. For granular insights on in-house vs. outsourced computing strategies, refer to Brink’s article on Spiceworks.
The data also provides a view of organizational spending across eight high-level categories, not to mention cybersecurity expenditure as a percentage of total IT spending.
Based on The State of IT Spend in 2024: How Does Your Organization Compare?, organizations spend a median of 11.1% of the total IT budget on cybersecurity, with the upper and lower ends touching 25.1% and 1%, respectively. This is derived from companies’ risk appetite. Brink details organizations’ cybersecurity spending in his thought piece for Spiceworks.
To highlight the importance of cybersecurity, it is listed as a subcategory under four of the eight high-level categories where organizations invest today. Having a robust cybersecurity outlook with the appropriate funding can help organizations manage downside risks, one of Brink’s three suggested outcomes. At the same time, they must also prioritize the other two outcomes as each subcategory competes for a slice of the finite budget pie.
Eight High-Level Categories in The State of IT Spend in 2024
Source: Aberdeen, Spiceworks
It’s like playing roulette. You place your bets according to what you want to prioritize. Refer to Brink’s take on the breakdown of IT spending across hardware, software, hosted/cloud-based services, managed services, facilities and power, telecommunications, IT labor, and internal services.
“There’s only so much freedom that you have and sometimes you have to say, ‘we’re not gonna do that right now. We’re placing our bets on these places and there’s no budget for other things,” Brink noted.
How does your organization compare in IT spending? Share with us on LinkedIn, X (Twitter), or Facebook. We’d love to hear from you!
Image source: Shutterstock
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