UK IT leaders cautiously optimistic about prospects in 2025

Most report stable or rising budgets and good prospects, but the average masks continuing difficulties for many

UK IT leaders expressed cautious optimism about their business prospects this year, according to Computing’s latest research, although many across all sectors continue to face financial pressures, with those in the education sector more likely to be pessimistic about the coming period.

In most UK organisations IT budgets are steady or rising, according to Computing’s latest research.

135 senior IT decision makers in UK business and public sector organisations said that, on average, IT budgets are around 5%-10% of annual revenue.

Fifty-one percent said that budgets were unchanged in the current period, compared with last year.

Twenty-seven percent said their spending was increasing, although this was often just to keep up with inflation or rising costs of cloud services, while a less fortunate 22% were experiencing spending cuts.

Among those reporting the highest spending increase of 20% or more, were: a bank pushing a “separation programme activity across the IT landscape”; a company in distribution and transport factoring in the software and consultancy costs of installing a new ERP system; and an organisation in the health sector investing in more IT roles.

A manufacturer saw budgets rise by 10% due to supporting additional staff “due to legacy Oracle systems and the company's reluctance to change them for more modern versions,” while an energy company was having to bolster its cyber security measures in accordance with the government’s latest edicts on protecting critical national infrastructure.

Those seeing budgets shrinking were disproportionately in education, including an independent school whose deputy head pointed to “increased challenges in the independent education sector due to the new government”. A senior IT professional in an academy trust, which also saw budgets drop by 20% or more, said less central funding was now available. A senior network administrator in a school commented: “Education is getting no extra money yet prices and wages rise”.

Other organisations were tightening belts too, including a large manufacturing company, which was having to make cuts because of a difficult trading environment.

However, not everyone cutting budgets was doing so because less money was coming in. Several respondents said they had made efficiency savings previously and that budgets had been reduced accordingly. “While underlying IT costs are slowly growing, we cut out a huge amount of wasteful spend,” said the software director of a technology company. Others mentioned expensive contracts coming to an end.

Spending on AI

A small number of respondents (4%) said that up to 50% of their budget was now going on AI; although these organisations, which included technology and healthcare companies, were very much an outlier. Despite all the hype, the vast majority were dedicating 5% or less of their IT budgets to GenAI.

Spending on cloud

Outlay on cloud services was much more significant, with many respondents complaining about recent price rises. Nine percent were spending more than half their IT budget on cloud services, with one company, a small software firm, spending more than 80%.

Spending on partners

Meanwhile a median of around 10% of IT budgets go on partner organisations such as resellers, MSPs and integrators. The biggest spenders here, in terms of proportion of IT budget, were large organisations in the public sector, education and manufacturing.

Overall, slightly more (28%) respondents said they felt optimistic about their business’s prospects 2025 than felt pessimistic (25%).

Look out for a full and detailed breakdown of Computing’s research into IT budgets and strategy coming soon.