Hello. This is Alex Bakker with what’s important in the IT and business services industry this week.
If someone forwarded you this briefing, consider subscribing here.
2025 IT Budget Allocations
We recently completed our 2025 Technology Budget and Spending Study to understand how large enterprises are planning to prioritize and allocate their technology spending in 2025.
The net of the study is that enterprises will focus their IT investments on improving productivity and reducing costs – both areas they feel performance lags significantly behind their objectives.
Given this context, organizations can expect limited growth in people-related costs (including both internal and external staff) and will invest instead in AI, security and software to deliver on their cost-savings objectives. (See Data Watch)
Data Watch
What’s Next
As we wrote a few months ago, early use cases for AI have been focused on capacity-limited, task-based work. We anticipate that enterprises will shift their AI adoption to support not only capacity but also expertise.
The data support this line of thinking as well. Enterprise investments in 2025 will focus on implementing additional AI and other software that can boost productivity with existing staff without having to add human capacity.
Still, while organizations prize productivity, when it comes to AI, increased output from productivity lags investment and training. And, as an organization grows, so too grow the challenges of complexity and change management.
Given this, we believe individual AI pilot projects will continue to face headwinds with scaling. We also foresee that the use of AI for broader transformation initiatives will be more successful than standalone pilots, as broader programs are better able to drive simplification and change management. Fortunately, it appears that many organizations are focused on longer and more transformative deals, which are likely to provide strong tailwinds to AI success in 2025.
About the author
