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Technology Costs & Where It’s Worth Your Business’s Spend

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Technology Costs & Where It’s Worth Your Business’s Spend

Read Time: 5 minutes Updated at: October 26, 2023

2020 was a difficult and life-changing year, the pandemic caused uncertainty and massive changes on a global level. Besides the enormous human health effects, the pandemic presented numerous challenges for businesses, resulting in economic instability and forcing many companies to shut down and others to rethink their strategies.

With businesses and workplaces closed, remote work became a necessity. Consequently, IT departments deployed technologies to guarantee business continuity, support remote work, and optimize business processes. They invested in work-from-home technologies as well as cloud computing, data analytics, and automation, which increased information-technology spending. Organizations spent $15 billion weekly on technology to equip the work-from-home workforce, a historic technology investment.

Current State of IT Spending for SMBs in 2021

According to Gartner Inc, the global IT spending will be $3.7 trillion in 2021, a 4.3% increase from 2020. 70% of corporate boards affirm that the pandemic has increased IT spending. Among the causes of the increased spending include changes in business operations due to the crisis and the need to support remote workers. IT budgets are allocated to hardware, software, and cloud services.

IT budget and spending increases in 2021 will vary from one industry to another. Key sectors such as power and utilities, government, healthcare, technology, financial services, and professional services have already witnessed an increase in their IT costs. The Bank of America Corp, for instance, plans to spend $10 billion on technology this year, with $3.4 billion directed to new technologies.

Businesses have the following IT spending plans in 2021.

  • 44% — increase digital transformation

  • 36% — enhance IT operations and systems performance

  • 33% — improve security and risk

  • 32% — connect workers using standard, secure, and user-friendly technologies

  • 30% — create training aids for remote employees

  • 27% — refine disaster management

As opposed to previous years when businesses were more focused on integrating new technology advancements, the main focus is now optimizing existing operations. “Businesses are focusing less on emerging technologies and instead, on ensuring a strong IT foundation to support productivity and business continuity,” said Electric CEO Ryan Deney in a recent CIO Dive article.

However, in the coming years, companies will adopt new security solutions such as employee security training, breach detection systems, and AI-powered security solutions as new security threats emerge.

4 Important for Technology Investments for 2021

1. Cybersecurity

Research reveals that 4 out of 10 organizations have encountered a security breach during the pandemic. From January to April 2020, Forbes reveals that banks have experienced a 238% rise in attacks while cloud servers have encountered a whopping 600% surge in server attacks. As such, investing in IT security should be a top priority for organizations across the globe.

No business is safe from hackers, and the more a firm invests in cybersecurity, the better. A cyberattack is detrimental and can hurt your operations, tarnish your reputation, and cost you millions in litigation expenses. As more and more companies prioritize security, cybersecurity skills will be in high demand.

Watch Now: The Leadership Series | Why a Disaster Recovery Plan is Vital for SMBs

The risk and severity of ransomware attacks and other cyber threats continues to escalate, and research shows that 1 in 5 companies don’t have a backup and disaster recovery plan in place.

To respond to these risks, you need a comprehensive backup and disaster recovery plan (DRP) that ensures business continuity.

2. Cloud Services

The extensive shift to remote work has compelled businesses to look for technologies that can be accessed from anywhere, anytime. Cloud technologies have become lucrative because they are flexible and scalable and can be accessed remotely.

These technologies have been particularly appealing to small businesses because they are cost-effective and do not require a high level of technical knowledge in-house. In 2021, almost a third of IT budgets will be spent on the cloud.

3. Work from Anywhere Initiatives

At the height of the pandemic, almost half of the US workers were working from home. In 2021 and beyond, more workers will work remotely. 43% of leaders affirm that more than half of their employees will be remote workers after the pandemic.

The technology giant Microsoft, for example, has adopted a hybrid policy that permits more employees to work remotely. Working from home has benefits for employees and organizations alike. While employees enjoy improved work-life balance and enhanced flexibility, companies benefit from reduced in-office expenses.

Working from home makes the investments businesses have already made to equip their remote workers worthwhile. Also, companies need to continue investing in technologies to support the employees working from home. Productivity software will be the most significant software spending in 2021, taking up 12% of the total software budget. New technologies will not only maintain high productivity but also ensure business continuity as uncertainty prevails.

4. Customer Experience and Engagement

During the pandemic, it was essential to attract new customers and establish strong relationships. Subsequently, enterprises spent IT budgets on technologies to support customer-facing initiatives. Among the technologies is customer relationship management software (CRM) that manages interactions with customers. Salesforce reports that 24% of small businesses have implemented CRM software since March 2020. CRM tools enhance customer communication, improve efficiency through automation, streamline reporting, and simplify collaboration.

Why Should Your Business Budget for IT Costs?

  1. Increase revenue: One piece of research shows that SMBs that amplified technology adoption and investments during the pandemic are 42% more likely to increase revenue.

  2. Improve agility: In the competitive and uncertain business environment, businesses that budget their IT costs based on their needs and changing business landscape will attain competitiveness. Those who fail to plan for the future of technology will be left behind.

  3. Cut costs: When you budget for IT costs, you create guidelines for IT purchases and reduce the probability of failed technologies, thus saving costs.

  4. Cater for unexpected expenses: The COVID-19 pandemic taught businesses the need to budget for unforeseen costs. With employees working from home, companies needed unanticipated funds to facilitate remote work.

It is indisputable that COVID-19 increased organizations IT spending significantly. With lockdowns and stay-at-home orders, remote working was a necessity. Businesses had to spend vast sums of money on IT infrastructure, from software to hardware and managed services, to support remote workers, maintain productivity, and ensure business continuity.

Cybersecurity, remote work, customer-facing initiatives, and cloud services are among the key IT categories businesses should prioritize when allocating IT budget. With remote work on the rise, cloud services and cybersecurity have proven fundamental for business survival.

Are you considering outsourcing your IT as it relates to your tech spend for 2021? We recently discovered Electric delivers 105% ROI on its remote IT services.

Read Electric's Total Economic Impact report

Justin Sheil

Justin Sheil has 5+ years experience writing about a wide range of technology topics.

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