Channel to benefit from IT spending increase

Channel partners “in driving seat” when it comes to firms’ IT spending, says Spiceworks

There is good news ahead for the channel, with many customers looking to increase their IT budgets in 2020, according to Spiceworks’ latest State of IT study.

The survey of IT professionals in Europe and North America shows that 44% of businesses plan to increase their IT budgets by an average of 18%. The growth is being driven by the need to replace ageing IT infrastructure, as well and growing security concerns, it reports.

Falling under the category of replacing ageing IT are Windows 7 and Windows Server 2008, both of which reach end of service in January 2020. The survey highlights the opportunity for the channel to migrate their customers onto Windows 10, with 79% of firms still using at least once instance of Windows 7.

Companies are also looking to buy new server hardware with the end of support for Windows Server 2008, but there are mixed results as to where and how they will spend their money: 48% of organisations plan to buy directly through the manufacturer, 38% will buy through a VAR, 26% through an online reseller, and 18% through an MSP.

Elsewhere, European businesses are more likely to increase IT spending in 2020 because of corporate tax cuts, with 15% of European businesses investing in IT and expanding budgets due to cuts, compared with only 4% in North America.

Emerging technologies

Spiceworks says that as IT budgets rise, adoption of emerging technologies often grows in parallel. For example, the survey shows that adoption rates of artificial intelligence (AI) technologies are expected to nearly triple, from 15% today to 42% by 2021, while adoption of hyper-converged infrastructure, edge computing and serverless computing technologies are expected to double to 46%, 43% and 40%, respectively, over the same time period.

Adoption rates of emerging technologies in large enterprises – those with more than 5,000 employees – are up to five times higher than in small businesses with fewer than 100 staff.

“The data is good for channel partners because a lot of organisations are adopting new technologies,” Peter Tsai, senior technology analyst at Spiceworks, told MicroScope at the company’s annual user event, SpiceWorld, in Austin, Texas. “And the channel partner often serves as a trusted adviser to deploy those technologies, such as containers or edge computing.”

But there are still challenges ahead for the channel. “Buying technology has gotten complex,” said Elizabeth Ronco, Spiceworks’ executive director, product management.

Multiple stakeholders

Ronco referred to the multiple stakeholders involved in the technology purchasing process today, and a typical four to six-month decision-making timeframe.

Some technology purchases are relatively straightforward – hardware still accounts for the greatest allocation of IT budgets, at 33%, with the average length of purchase journey set at a month or less.

However, purchasing decisions around collaboration software, for example, currently accounts for 6% of IT budgets but involves up to nine stakeholders within the business, depending on its size. The process can also take up to six months.

However, Ronco told the IT professionals and MSPs in attendance at SpiceWorld that “despite all these people involved in decisions, all the different departments – all of you are still in the driving seat”.

In addition to the 33% of IT budgets spent on hardware, 29% will go on software, 22% on hosted/cloud-based services, and 15% on managed IT services. Small companies will spend a significantly higher portion of their IT budgets on hardware, but as companies grow in size, businesses are spending less on hardware and more on managed IT services.

Read more on Managed IT Services