2016 IT Budget Predictions – A Cloud on the Horizon

BrandPost By David Guthrie
Sep 15, 2015

Several IT leaders weigh in with their predictions for the budget landscape in the coming year, with cloud computing leading the charge.

budget predictions

Let’s talk everyone’s favorite subject: budgets.

In order to start getting a picture of what IT budgets might look like in the coming year, we polled a wide variety of IT leaders across various industries and verticals. What stood out in their responses wasn’t so much the differences as it was the similarities: the move to the cloud is still largely ruling the day, as legacy systems are deprecated and support and other expenses reclaimed in the name of transferring mission-critical operations into a private or hybrid cloud infrastructure.

This is right in line with predictions from analyst firm IDC, who has cloud software growing to surpass $112.8 billion by 2019.

Take a look at some of the responses we received from IT leaders about their budget predictions below. Do these thoughts ring true, or do you have different line items on the brain?

Gerard Verweij, Principal of PwC, predicts that “2016 IT budgets will be impacted by the continued move from on premise to cloud solutions and from the increased IT spend outside of the CIO organization. The increased move towards cloud will provide predictability of spend as well as a move to OpEx. For larger and more mature companies there will be further consolidation and rationalization of spend particularly in areas such as external spend (outsourcing, service providers etc.) as well as infrastructure and storage. Overall IT spend is still expected to increase in 2016 both within the CIO organization as well as outside the CIO organization with a shift towards the business and spend on value creation.”

Corey Nachreiner, CTO of WatchGuard Technologies, predicts that “CIOs should expect a slight increase in their overall IT budget, due to the positive state of the economy and the overall need to modernize IT services. CIOs will continue to increase their cloud spending, taking advantage of the benefits of OpEx expenditures.”

Justin Giardina, CIO of iland, touched on security concerns in addition to increased cloud spending. According to Justin, “With so many high-profile cyber attacks and IT outages hitting organizations recently, we see companies investing heavily in security measures, including encryption and malware detection, and disaster recovery. That dovetails with growing dependence on cloud computing. Seven or eight years ago, many companies were skeptical of cloud, but now that it has been proven to be safe and effective, they are reducing spending on datacenter hardware and putting more resources toward cloud infrastructure. In today’s world, that means increased funding for infrastructure-as-a-service but also cloud security and disaster-recovery-as-a-service. Organizations are embracing cloud, but they also know they have to protect themselves, their data and their customers’ data.”

Scott Gilgallon, VP Channels & Business Development of Appcara framed things through the “as-a-Service” lens, stating that, “2016 is shaping up to be the year of multi-cloud adoption and multi-cloud application management. IAAS, SAAS, PAAS providers have proven the cost saving, mobility, security and elasticity of cloud computing. In 2016, we will see a much higher demand for enabling management, delivery and extensions across multiple Public cloud providers, private cloud applications and hybrid cloud providers.”

John Matthews, CIO of ExtraHop agrees, adding that, “Cloud — SaaS, IaaS, PaaS, and hybrid — are going to continue to pull more and more budget from traditional on premises offerings. In 2016, expect to see continued downward pressure on datacenter spend as more and more enterprise works to build and run hybrid cloud environments.”

Two experts tackled the problem of legacy and end-of-life systems. According to Eric Roch, Principal, Strategic Advisors Team, Perficient, Inc., “Many legacy systems are over 30 years old. IT and business users alike have clung to these systems even though maintenance costs are high and agility is low. Users that once feared technology change now welcome it due to the positive user experience they have had with mobile apps. The business will begin to aggressively push IT to migrate to cloud and mobility by cutting IT funding for legacy systems and embracing a software startup mentality. The fear of technology business disruption is overtaking the fear of technology change and cumbersome legacy systems have to go.”

Jason McKay, SVP & CTO of Logicworks builds on Eric’s ideas, stating that, “Spending millions to refresh end-of-life servers is no longer an attractive option as SaaS applications and cloud infrastructure gives enterprises more for a lower cost. I predict enterprises will invest significantly in new IT staff and training, along with the well-discussed growth of SaaS products and cloud platforms.”

Do you agree with these experts’ predictions, or does your own 2016 budget outlook look different? Let us know in the comments below.

For more insights and analysis on trends shaping the future of IT and collaboration technology, download “The Future of Business Collaboration: 2015 Edition” today.