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According to a survey of 780 IT decision makers in North America and Europe conducted by Spiceworks, a provider of IT management tools, IT headwinds appear to be growing stronger. The survey data suggests that MSPs may need to focus their efforts in specific areas to overcome these challenges.

The Spiceworks survey finds over half of respondents (51 percent) expect their IT budget to remain flat in 2019, compared to 38 percent that expect their IT budgets to grow. A total of six percent of respondents expect their IT budgets to decline.

More challenging, the survey finds that managed services spend will only increase one percent year over year. Managed services on average will represent 14 percent of the total IT budget. Allocation of those managed services budgets will span managed hosting (11 percent), managed storage/backup (10 percent), managed security (9 percent), and managed business applications (8 percent).

Survey respondents on average plan to spend 35 percent of their IT budgets on hardware in 2019, up by 4 percentage points year over year. Software (26 percent) and cloud (21 percent) budget allocations remain steady year over year.

Organizations with 1,000 to 4,999 employees plan to allocate 22 percent of their IT budgets toward hosted/cloud-based services, an increase of two percentage points year over year, and enterprises with more than 5,000 employees plan to allocate 24 percent of their IT budgets toward cloud services, up by three percentage points year over year. Online backup and recovery leads spending in the hosted/cloud-based services category (15 percent), followed by email hosting (11 percent), online productivity (9 percent), and web hosting (9 percent). 

Reasons for increasing IT spending in 2019 vary considerably by company size. A total of 56 percent of companies with more than 5,000 employees expect IT budgets to grow, and 43 percent expect them to stay the same in 2019. Large enterprises (88 percent) are more likely to boost their budgets due to increased security concerns. In contrast, 35 percent of businesses with 500 to 999 employees reported increased IT budgets for 2019 because of lower taxes. Small organizations with less than 100 employees also plan to significantly increase their hardware investments from 31 percent of their total IT budget in 2018 to 42 percent in 2019.

The survey finds allocations of IT budgets on average for hardware will span desktops (18 percent), laptops (17 percent), servers (12 percent), and power and climate hardware (7 percent). Top software budget allocations span operating systems (12 percent), virtualization (10 percent), productivity (10 percent), and security software (10 percent).

Appealing to the decision makers

It’s apparent MSPs will have their work cut out for them in 2019. In the absence of any fundamental changes to the economy, it’s clear that trillions of dollars will still be spent on IT in 2019. But in terms of how those dollars are allocated, inertia remains the single biggest challenge MSPs face. There’s a strong tendency for organizations to continue to rely on an existing IT team. In fact, the Spiceworks survey notes IT decision makers are nearly twice as likely to be the sole decision maker for most technology categories when compared to business decision makers (BDMs). In small businesses, IT decision makers are nearly four times as likely to be the sole decision maker. IT decision makers that oversee IT staff have an inherent bias against relying on external service providers. According to the Spiceworks survey, a president/CEO is involved the technology purchase decisions in 38 percent of organizations, line of business executives are involved in 32 percent of companies, and finance managers are involved in 28 percent of organizations. Much of the involvement, however, might only involve approval from one decision maker.

In an ideal world, IT decision makers would realize the value of managed services when they are trying to extract more value from their IT investments. But short of a sudden epiphany among IT decision makers, most MSPs in 2019 should expect that if they want to grow they will need to find a way to force that issue.

The Smarter MSP take? Knowing that IT decision makers have bias, such as more towards their current systems, processes and employees, and less towards managed services, means MSPs must find more creative ways to get to the negotiating table. Check out our Sales and Marketing resources for ideas.

Photo:  Brian A Jackson / Shutterstock.


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Mike Vizard

Posted by Mike Vizard

Mike Vizard has covered IT for more than 25 years, and has edited or contributed to a number of tech publications including InfoWorld, eWeek, CRN, Baseline, ComputerWorld, TMCNet, and Digital Review. He currently blogs for IT Business Edge and contributes to CIOinsight, The Channel Insider, Programmableweb and Slashdot. Mike blogs about emerging cloud technology for Smarter MSP.

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