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Channel to benefit from increased IT budgets

Spiceworks survey shows end-of-life and upgrade cycles to fuel IT spending in 2018

The channel is set to benefit from improved IT budgets in 2018, according to latest research from Spiceworks. The firm’s 2018 State of IT report indicates that worldwide IT budgets will stabilise, and in many cases, increase next year.

The survey shows 44 percent of companies questioned expect their IT budgets to increase, with 43% expecting their budgets to remain flat. Those that anticipate a bigger budget next year believe it will increase by 19%, on average.

“The economy has been relatively stable for the past few years and companies are getting more confidence to invest,” Peter Tsai, senior technology analyst at Spiceworks, told Microscope at the firm’s annual user event in Austin, Texas.

The biggest driver of IT purchasing will be the end-of-life of products, as well as business growth and upgrade or refresh cycles.

Choosing a partner

For the channel, price and a positive prior experience with an IT provider are cited as the main reasons a company works with a partner – particularly for businesses with less than 1,000 employees.

“The smallest companies are extremely price-sensitive, and they value an existing relationship more than larger companies who may have someone dedicated to procurement and obtaining technology at the lowest price,” said Tsai.

Price and experience aside, an existing relationship, reputation, and ease of purchase all rank as top reasons why organisations select an IT service provider.

“Channel partners are often relied upon to be the trusted advisor, and if you’re just a jack-of-all-trades it’s hard to know everything about every aspect of technology, so you lean upon the experts,” said Tsai.

Budget allocation

Most of companies’ budgets in 2018 will still be spent on hardware (31%), alongside software (26%), hosted/cloud-based services (21%), and managed services (15%).

In hardware, budget allocations for desktops and laptops are nearly tied at 16 and 15%, respectively. Thirteen percent of hardware budgets will also be spent on servers, followed by networking devices (eight percent), tablets and mobile devices (seven percent), and security appliances (seven percent).

In software, companies now spend almost as much on security software (10%) as they do on operating systems (11%). This is followed by productivity software (10%), and virtualisation (nine percent).

In managed services, 11% of budgets will be spent on managed hosting, followed by managed storage/backup (nine percent), managed hardware support and maintenance (nine percent), and managed security (nine percent).

In addition, larger companies are more likely than smaller ones to allocate budget to managed services, with SMBs more likely to shell out for managed hosting. Larger organisations are more likely to invest in managed cloud infrastructure in 2018, says the report.

Cloud

Cloud is set to take budget from both hardware and traditional software spend.

“Cloud is occupying a large percentage if IT spend, with 55%  of businesses reporting an increase in their cloud budget,” says Tsai.

Sixty-six percent of companies with 1,000 to 4,999 employees and 72% of those with more than 5,000 employees reported an increase in hosted/cloud budgets.

In terms of what’s driving more companies to the cloud, the results show 42% are moving to the cloud to provide access to data anywhere, while 38% are looking to enhance their disaster recovery capabilities, and 37% want to enable better flexibility and scalability.

Emerging technologies

Elsewhere, the report highlights the adoption of emerging technologies like Internet of Things (IoT), Artificial Intelligence (AI), and Virtual Reality (VR).

Currently, 29% of organisations have adopted IoT while 18% have embraced VR, and 13% are using AI technology. But in the next 12 months this will increase significantly to 48%, 32% and 30% for IoT, VR, and AI, respectively.

Adoption of emerging technologies is higher in larger organisations, with Europe currently ahead of the U.S. in take-up.

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