Technology budgets in the US grew at a healthy clip this year, and, according to the latest projection from Forrester, they’ll continue their upward trajectory in 2019. A new report from the analyst firm expects tech spending to grow by 6 percent and hit $1.8B next year.
Some of the healthiest spending is unsurprisingly around cloud services, which will grow at a robust 20 percent. Approximately $4 in every $10 spent on applications and middleware will be cloud-based next year.
Interestingly, the report projects that technology staff will only grow by about 2 percent next year. Forrester surmises that the strong cloud adoption is “nibbling away at growth in tech staff.”
Unsurprisingly, digital transformation initiatives seem to be driving a large amount of tech spending growth. The report shows that business technology (BT) software—the applications that make it possible to win, serve, and retain customers—will comprise almost a third of technology budgets next year.
“In the steady growth/low inflation business environment that has characterized the US economy for the past half dozen years, the path to higher profits for firms lays in winning, serving, and retaining customers. BT software and services—comprising one-third of tech budgets—that helps firms achieve these objectives have grown by 7% to 10% since 2014,” wrote Andrew Bartels in the report.
According to Bartels, the boom times for tech spending have been driven by strong economic growth and low interest rates. As economic uncertainty and interest rates rise, he recommends CIOs prepare for troubles that could potentially rise in 2019 or 2020.
“CIOs need to walk a line between supporting their firms’ current growth opportunities and being able to respond if those opportunities evaporate. The primary focus needs to be on growth and innovation, because that is the most likely scenario for most firms,” he wrote. “But given the age of this expansion and the risks of a downturn, CIOs also need to be thinking about getting prepared for that downturn. “