Computing Delta research: IT budgets are up with few anticipating reductions in 2022

When the pandemic hit the UK last March, we saw an accelerated move to the cloud, a mass buy-up of laptops and VPNs and of course a surge in the adoption of video conferencing tools.

These changes came at a price, even as some sectors were suffering a dramatic fall in income.

In a Computing Delta survey of 120 IT leaders in organisations with 150 or more employees across all sectors, we asked about what the need to get through Covid meant in terms of IT budgets and priorities.

IT budgets for 2020 were drawn up before the pandemic, whereas those for 2021 were created in the midst of the pandemic. We asked respondents what had changed in this time.

Base: 120 UK IT leaders at organisations with more than 150 employees

In 53 per cent of cases the IT budget grew in 2021 compared with 2020; in 25 per cent it had remained static, while 22 per cent of organisations reported a reduction in the IT budget after the pandemic hit, which must have created some severe difficulties.

For those IT leaders reporting budget cuts, first and foremost it was about reduced income, which in some cases also led to downsizing and closures. ‘Politics' was also high on the list of factors, which says something about the organisations most likely to have experienced a cut. Indeed public sector organisations were disproportionately affected; but so too were the manufacturing and engineering, distribution, retail and wholesale, charity and hospitality sectors. On average, IT budgets in organisations reporting a cut in 2021 were down about 10 per cent on 2020 levels, according to the figures given by the respondents, with the caveat that this is a small sample.

But as we saw earlier, the majority of IT leaders said their budgets had increased in 2021, with figures provided suggesting average rises of more than 10 per cent.

Unsurprisingly, the main reason given for the increased spend was supporting home and remote working, and, closely related to that, security. Migrating services and data to the cloud, which also carries an initial cost, was another driver, while a third of respondents mentioned important systems reaching end of life - including the need to upgrade from Windows 7.

Half of those who enjoyed larger budgets this year expect to see a further rise in 2022 as well. Asked why, these were some of the responses.

"Due to the pandemic we have decided to reduce spending on estate projects, optimise use of existing estate and invest more in digital to facilitate this. The pandemic has also acted a catalyst for a move to remote learning", said a team leader in higher education, flagging up a move from the physical to the digital that will be common to many.

"Increasing complexity of data analysis combined with more security requirements," said an IT director in business services, who was one of many to mention security. Skills shortages were another hot topic, with Brexit pushing up the price of talent. Some were halfway through a digital transformation and needed to keep funding up to see it through, while others said they needed to make sure the new normal of home working is properly bedded in, which meant additional cash.

But not everyone was so lucky. About 10 per cent were facing the double whammy of IT budget cuts for two years running.

"Hits from the pandemic and Brexit," said an IT security manager in education, while some in the public sector mentioned cuts mandated by central government. Again, the public sector and manufacturing were disproportionately represented at the less fortunate end of the scale.

Further findings from this research will be revealed at Deskflix: Digital Workplace on 12th May. Register today.