Identify Your Business North Star for 2020
To map how businesses are spending their technology budgets in the coming year, and identify which emerging trends are on the horizon, Spiceworks surveyed more than 1,000 technology buyers in companies across North America and Europe.

For the first time, the study also includes Spiceworks business-level intent data to provide both IT buyers and technology brands with insights into the purchase patterns of organizations in-market to buy a range of technologies, from security and collaboration tools to end user hardware and beyond.

Key Findings:
IT Budget Growth
IT budgets rise as businesses replace outdated technology: 44% of businesses plan to increase tech spend in 2020, up from 38% in 2019.

Budget Drivers
One in four enterprises (1,000+ employees) are increasing 2020 IT spend due to a recent security incident.

Emerging Tech Trends
Business adoption of AI-powered technologies is expected to triple by 2021, while adoption of edge computing is expected to double.

Future Tech in the Workplace
Two-thirds of large enterprises (5,000+ employees) plan to deploy 5G technology by 2021.

Technology Buyer Insights at a Glance
Chart your destination and set your sights with tech buyer insights
As the business technology market nears $4 trillion in annual spend, there will be increasing opportunities for technology vendors and service providers to grow their businesses, and for technology buyers to innovate and upgrade their infrastructure, software, and services.
So before we focus in on the IT budget breakdown for the year ahead, let’s take a quick look at some buyer insights across key technology categories that represent more than half of the total IT spend in businesses today. These categories are inclusive of on-premises solutions, cloud-based services, and managed services.

Security
Endpoint, network, database security, and more
Collaboration & Communication
Telephony, team collaboration, unified communications, project management, and more
End User Hardware
Desktops, laptops, printers, mobile devices, and more
Server Technology
Server hardware and related technology, such as hyperconverged infrastructure, UPS, and more
Networking
Routers, firewalls, wireless networking, and more
Storage & Backup
Server backup, endpoint storage, data warehouse solutions, and more

Business Tech Spend in 2020
Align your telescope on tech spend constellations to guide your way into the new year
In 2020, most businesses anticipate top-line revenue growth. Across all company sizes, the majority of organizations (58%) across North America and Europe expect revenues to increase, continuing sustained growth from 2019.

Expected business revenue change from 2019 to 2020

Total
Region
Company Size
58%
25%
7%
10%
Total
Increase
No change
Decrease
Don’t know
En Route to Increased Budgets
As revenues grow, IT budgets often increase in conjunction. The survey found 88% of businesses expect IT budgets to either grow or stay steady over the next 12 months. And compared to 2019, we’re seeing more upward acceleration: 44% of businesses plan to grow IT budgets in 2020, compared to 38% in 2019. Organizations that expect IT budget growth next year anticipate an 18% increase on average. Only 8% of companies expect IT budgets to decline in 2020.

Businesses in North America are even more likely to see an IT budget boost: 50% expect an increase in 2020 vs. 39% in Europe.

88%
88% of businesses expect IT budgets to grow or stay steady over the next 12 months.

Among different company sizes, enterprises with 1,000 to 4,999 employees are most likely to increase IT budgets in 2020.
Expected IT budget change from 2019 to 2020

Total
Region
Company Size
44%
44%
8%
3%
Total
Increase
No change
Decrease
Don’t know

Factors Driving Course Corrections
What’s driving IT budget increases in 2020? Overall, the need to upgrade outdated IT infrastructure continues to be the biggest driver, followed by escalating security concerns, and employee growth.

However, budget drivers vary by company size and location. For example, “a greater priority placed on IT projects” is the top factor influencing IT budget growth in enterprises, likely because large organizations are typically better funded and have more resources to allocate against strategic initiatives than SMBs. Additionally, with more data, departments, and employee devices to connect, manage, and secure, 25% of enterprises are also increasing IT spend due to a recent security incident, compared to only 4% of small businesses.

Compared to those in Europe, North American businesses are more likely to increase spending in order to upgrade outdated infrastructure. On the other hand, European businesses are more likely to turn on the boosters for IT spending due to regulations like GDPR.

Interestingly, following a double-digit reduction in the U.S. tax burden on business profits in 2018, only 4% of North American businesses said they plan to increase IT spending in 2020 due to corporate tax cuts. However, 15% of European businesses said they’re investing in IT and expanding budgets due to corporate tax cuts, despite relatively modest tax reductions in the region like the planned 2% corporate tax cuts in the U.K.

Top factors leading to IT budget increases in 2020

Total
Regional
Company Size
64%
47%
47%
45%
31%
29%
13%
10%
9%
Need to upgradeoutdatedinfrastructure
Increased securityconcerns
Employee growth
Increased priorityon IT projects
Business revenueincreases
Changes toregulations
Recent securityincident
Currencyfluctuations
Corporate tax cuts

IT Budget Breakdown
Compute the orbit and velocity of IT budgets
Spiceworks also examined how business technology budgets will be allocated across hardware, software, cloud services, and managed IT services. Hardware will continue to get the highest IT budget allocation, but hardware budgets as a percentage of total IT spend are waning slightly from 35% in 2019 to 33% in 2020.

Budgets for software, cloud, and managed services will remain steady year over year, but the mix varies depending on company size. For example, the smallest companies will spend a significantly greater percentage of their IT budgets on hardware, but as company sizes grow, enterprises will spend less on hardware and more on managed IT services than SMBs, resulting in a more even distribution of enterprise spend across hardware, software, cloud, and managed services.

IT budget allocation in 2020

Total & Regional:

Total
North America
Europe
Company size:

1-99
100-499
500-999
1,000-4,999
5,000+
33%
29%
22%
15%
0
Hardware
Software
Hosted/cloud-based services
Managed services

The Hardware Constellations
Digging deeper into hardware spend, the greatest portion of hardware budgets will go towards laptops, desktops, and servers in 2020.

But again, spending plans vary based on the size of the company. Small companies will allocate a significantly greater percentage of their hardware budgets towards laptops and desktops. Midsize companies will put more money towards tablets and mobile devices, and enterprises — with more users and typically more data center infrastructure to manage — will spend more on power/climate and telephony hardware.

Hardware budget breakout for 2020

Total & Regional:

Total
North America
Europe
Company Size:

1-99
100-499
500-999
1,000-4,999
5,000+
17%
17%
14%
8%
7%
7%
6%
6%
5%
5%
5%
3%
0
Laptops
Desktops
Servers
Networking
Tablets & mobile devices
Printers
Security appliances
Power & climate
External storage
Telephony
Peripherals
Other

The Software Star System
Within the software category, operating systems will account for the largest IT expenditure next year, with companies migrating away from Windows 7 and Windows Server 2008 R2 as the end of service date for both approaches on January 14, 2020. In fact, according to a recent security study from Spiceworks, 79% of businesses still run Windows 7. And while the majority of businesses expect to migrate before the end of service, 25% plan to take their chances and upgrade after the deadline, likely due to resources constraints.

When comparing the data by company size, the smallest businesses will allocate significantly more of their software budgets towards operating systems, midsize orgs (100-499 employees) will spend a bigger portion on productivity software and business support apps, and enterprises (1,000+ employees) will spend a greater percentage on virtualization, database management, and communications software.

Software budget breakout for 2020

Total & Regional:

Total
North America
Europe
Company size:

1-99
100-499
500-999
1,000-4,999
5,000+
13%
11%
10%
10%
9%
9%
8%
7%
6%
5%
5%
3%
4%
0
Operating systems
Industry-specific apps
Productivity
Virtualization
Business support apps
Security
Backup / disaster recovery
IT management
Database management
Email servers
Communications
Developer tools
Other

Mapping an Interstellar Cloud
Breaking down hosted/cloud service budgets, online productivity solutions top the list. In fact, cloud budget allocations for online productivity tools are increasing from 10% in 2019 to 14% in 2020, while budgets for on-premises productivity software will remain flat.

Online backup/recovery and email hosting represent the second and third largest budget allocations within cloud services.

When comparing 2020 cloud spend by company size, larger companies are allocating a greater chunk of their budgets towards platform-as-a-service and desktop-as-a-service solutions than smaller companies. But when it comes to infrastructure-as-a-service, midsize orgs with 100-499 employees are allocating more than their peers.

From an industry perspective, the regulated and security-conscious financial services segment and the tech-forward IT services industry will allocate significantly more towards desktop-as-a-service technology than other industries. Additionally, the manufacturing industry will allocate significantly more towards online backup/recovery solutions (perhaps because outages could potentially halt production), and the retail industry, which often has to support geographically distant stores, will set aside more money for online communications solutions.

Hosted/cloud budget breakout for 2020

Total & Regional:

Total
North America
Europe
Company size:

1-99
100-499
500-999
1,000-4,999
5,000+
14%
12%
10%
8%
8%
7%
6%
6%
5%
5%
5%
5%
3%
3%
3%
0
Productivity solutions
Online backup / recovery
Email hosting
Web hosting
Business support apps
Cloud storage
IaaS
Industry-specific apps
Communications
Security solutions
IT management
PaaS
Developer tools
DaaS
Other
Managed hosting, managed hardware support, and managed storage/backup will account for the biggest portions of managed service spend in 2020.

While not in the top 3, it’s worth noting money spent on managed IT help desk solutions will increase from 6% of managed service budgets in 2019 to 10% in 2020.

Compared to smaller businesses, enterprises will allocate a greater percentage of their budgets toward managed cloud infrastructure.

Managed services budget breakout for 2020

Total & Regional:

Total
North America
Europe
Company size:

1-99
100-499
500-999
1,000-4,999
5,000+
13%
11%
11%
10%
10%
9%
7%
7%
7%
6%
5%
4%
0
Managed hosting
Managed hardware support
Managed storage / backup
Managed IT help desk
Managed business apps
Managed communications
Managed print services
Managed security
Managed cloud infrastructure
Managed networking
Managed mobile computing
Other

Gravitational Forces
What’s pulling businesses toward purchasing new hardware, software, and services? In general, technology end of life, upgrade/refresh cycles, and additional technology needs to support company growth will be the biggest drivers of new technology investments in 2020.

Compared to enterprises, small businesses are more likely to purchase new technologies due to end of life events and end-user need, which could explain why they’re allocating more towards hardware, and laptops and desktops in particular. Enterprises — with their larger budgets and greater focus on strategic IT initiatives — are more likely to be swayed by newer technology with innovative features such as AI capabilities, perhaps to gain a competitive edge.

Top drivers of new hardware, software, and/or service purchases

Total
Regional
Company Size
62%
56%
50%
43%
42%
35%
32%
null%
Increasedpriority onmarketing
Customerexpansion
Increasedcompanyrevenue
Productexpansion
Success ofcurrentmarketingprogram
New marketingleadership
Changes toregulations
Corporate taxcuts

Future Tech in the Workplace
The beacon for the path ahead
In 2020, emerging tech adoption will continue the upward trend outlined in Spiceworks 2019 State of IT on future tech in the workplace. For example, business adoption of hyperconverged infrastructure, edge computing, blockchain technology, and artificial intelligence each grew 5 percentage points year over year.

Looking ahead, 5G technology is poised to see the most growth among emerging technologies with adoption expected to quintuple by 2021, while businesses’ adoption of AI technology is expected to nearly triple, and adoption of hyperconverged infrastructure, edge computing, and serverless computing is expected to double.

Large enterprises, which tend to place a greater priority on IT and have more resources than SMBs, are adopting emerging technologies up to 5 times faster than small businesses. For example, 31% of large enterprises (5,000+ employees) have adopted some form of blockchain technology compared to 6% of small businesses. When it comes to future technology plans, adoption of emerging technologies will grow exponentially as businesses look to replace outdated infrastructure. In particular, 70% of large enterprises plan to use hyperconverged infrastructure by 2021, while 68% plan to use edge computing technologies.

Interestingly, 16% of large enterprises — likely with branch offices located in areas offering early 5G coverage — are already using 5G technology, and adoption rates are expected to increase to 66% by 2021.

Adoption of technology trends

Total & Regional:

Total
North America
Europe
Company size:

1-99
100-499
500-999
1,000-4,999
5,000+
43%
41%
29%
25%
24%
20%
20%
15%
15%
15%
14%
7%
15%
14%
16%
15%
12%
10%
13%
17%
14%
11%
11%
14%
11%
15%
10%
12%
10%
8%
10%
10%
12%
10%
9%
16%
IT automation
Gigabit Wi-Finetworking
IoT
Containertechnology
Hyperconvergedinfrastructure
3D printing
Edge computing
Artificialintelligence
Serverlesscomputing
Virtual reality
Blockchaintechnology
5G technology
Currently Use
Plan to use in 12 months
Plan to use in 1-2 years
Mapping Out Industries
Adoption rates of emerging tech also vary greatly by industry. The data shows the security-minded financial services and cutting-edge IT services industries have the highest adoption rates for most of these technologies. For example, 25% of companies in the financial services sector are currently using blockchain, perhaps due to the inherent nature of encrypted ledger technology or its established use case with cryptocurrencies. The financial industry also enjoys the highest adoption rates for AI technology, perhaps due to the use of machine-driven algorithmic trading.

The IT services industry, whose business is to advise companies on technology decisions, has the highest adoption rates for many technologies, such IoT, VR, edge computing, and 5G technology. Because they’re often testing new technologies to stay ahead of the curve, this isn’t terribly surprising.

But which emerging technology will have the biggest impact on businesses? Most IT decision makers expect IT automation, AI technology, and IoT devices to have the biggest impact on their organization. In fact, over the last 12 months, IT decision makers have become more bullish on artificial intelligence: 32% believe AI will have the biggest impact on their organization, compared to 26% who said the same last year. This likely explains why adoption of AI-based technologies is expected to triple by 2021.

It’s also worth noting that opinions of emerging technologies vary greatly by company size. For example, compared to IT decision makers in small businesses, those working in large enterprises (5,000+ employees) are more likely to believe blockchain, edge computing, and 5G technology will have a major impact on their organization.
Technology trends expected to have the biggest impact on businesses

Total
Regional
Company Size
42%
32%
31%
25%
24%
23%
20%
17%
Increased priorityon marketing
Customer expansion
Increased companyrevenue
Product expansion
Success of currentmarketing program
New marketingleadership
Changes toregulations
Corporate tax cuts

Challenges Along the Way
When it comes to the top IT challenges in 2020, keeping IT infrastructure up to date will continue to be the top pain point.

However, some challenges will be more pressing in 2020 than they were in 2019. For example, businesses expect to face bigger challenges when it comes to following the latest security best practices and managing a mix of on-premises infrastructure and cloud-based services.

However, IT challenges vary by company size. Compared to enterprises, small businesses need more guidance when it comes to following security best practices and maintaining disaster recovery policies. Conversely, because they’re adopting emerging technologies at a faster pace, enterprises will need more help implementing new tech innovations seamlessly into their environment.

On a regional basis, North American businesses expect to face bigger challenges convincing business leaders to prioritize IT projects and providing security training to end users. Conversely, European businesses will continue to have more difficultly complying with regulations such as GDPR.

IT vendors, service providers, and consultants should keep these unique challenges in mind when reaching out to potential customers in different regions and company sizes.

Top IT challenges organizations expect to face in 2020

Total
Regional
Company Size
62%
56%
50%
43%
42%
35%
32%
End of life
Refresh cycles
Growth /additionalneed
Project need
End-user need
Budgetavailability
New technologyfeatures

Conclusion
In 2020, corporate revenues are expected to increase, and IT budgets will continue to reach for the stars.

Considering 44% of businesses plan to increase their IT budgets in 2020 by an average of 18% year over year, many businesses will have the ability to deploy more cutting-edge technologies in the workplace.

The overall growth in IT spend and adoption of new technologies will be guided by not only to company growth, but the need to replace outdated infrastructure and update older software such as Windows 7. Many businesses are also managing growing security concerns, particularly in enterprises where one in four increased IT budgets due to a recent security incident.

However, these challenges present opportunities for technology vendors and service providers to serve as navigators that can help businesses identify the best solutions to upgrade their infrastructure, address their security vulnerabilities, update their disaster recovery plans, and ultimately transform their technology environment with new innovations. IT vendors can better serve organizations’ unique IT needs by reaching out to the right buyers at the right time to guide them toward their business North Star.