This webinar explores the key factors shaping IT budgets as we head into 2024 and beyond. Topics include:
- Economic Backdrop: Amidst a range of often conflicting indicators, the general outlook is more positive when the details are examined.
- Annualized inflation: 3.7% – we forecast it will remain below 5% through 2024.
- Supply chain issues: moderating – but still not fully resolved. Labor unrest, future trade relations with China, war in Ukraine – all contribute to uncertainty.
- Unemployment: moderating, upward wage pressures have abated, talent remains tight
- American GDP growth: remains strong – despite weakness in Europe and China
- Global 2000 corporate earnings: generally strong, with growing cash piles
- Access to capital: constrained, real borrowing costs are above 10%
- The Impact of Generative AI: There is a sizable gap between what vendors expect to charge for premium LLM add-ons and what customers are prepared to invest.
- Users are still looking to understand the best use cases for AI and determine what foundational elements are required (e.g., security, data governance).
- In most areas of monetization, users simply want assurance their vendors are adopting AI – but many companies are fearful of making major business changes around AI.
- Vendors expecting a major uplift in ASPs from AI-enabled applications are likely to be disappointed. A more pragmatic view: AI enhanced solutions will preserve margins and mitigate commoditization.
- Recommendations:
- Invest strategically while avoiding across the board cost-saving measures, even if total costs must come down.
- Consolidate spend wherever possible, invest in monitoring and management tools, track usage and performance, and turn off unused features and seats.
- Analyze IT efficiency versus IT efficacy – it’s a smarter way of assessing IT and business outcomes.
- ROI/TCO models are gaining traction – buyers should expect them when assessing products, and vendors should have them on-hand to share proactively with prospects.
- Don’t wait to speak with references – Using reference checks for new purchases helps identify pitfalls and avoid hidden costs.
- Leverage vendor uncertainty and trade it for discounts in multi-year deals. Many suppliers are willing to trade discounts for longer-term agreements/structured payments. This is an opportunity to lower costs with strategic suppliers.
- The Bottom Line: IT budgets are likely to increase 4-6% in 2024.
- Technology remains critical to productivity increases and business differentiation.
- Significant demographic and business trends remain intact: legacy ERP systems are in need of renewal/add-ons, cyber security and modernization projects demand sustained investment.
- Finance departments are under-invested in modern tools.
- Leading companies smell opportunity and are investing ahead of weakened competitors.