IT Teams Need to Do More With Increased Budgets

A survey of 600 C-suite and IT decision-makers published today found the majority of organizations are trying to make increased IT budgets stretch even further as costs rise and the number of workloads deployed continues to increase steadily.

Conducted by SoftwareOne Holding AG, a provider of software and IT services, the survey found 93% of respondents expected IT budgets to increase, with 83% planning to invest more in application modernization. However, 83% also noted they are under pressure to stretch budgets even further as part of an effort to increase agility (46%), improve customer experience (45%) and improve security to support remote workforces (45%). A full 92% said they would be increasing investments in security.

The core issue that IT leaders are wrestling with appears to stem from increased cloud costs. The survey found the primary causes of those increased costs are inflation-related price hikes passed along by cloud service providers (41%), workloads exceeding planned capacity (40%), transformation initiatives that are cloud-dependent (40%), fewer cloud discounts (37%), lack of visibility into and management of cloud costs (34%), overprovisioning (34%), repercussions from previous lift and shift efforts (34%) and shadow IT (30%).

Craig Thomson, senior vice president of cloud and application services at SoftwareOne, said that technical debt is having a significant downstream impact across organizations. For example, the survey found 72% of respondents reported that digital transformation initiatives are falling behind, with 38% noting the accumulation of this debt stems from rushed cloud migrations throughout the pandemic. Just under a third (31%) failed to optimize workloads before commencing the migration. More than a third (38%) admitted their organization miscalculated the cloud budget.

Progress is being made, however, with 45% of respondents reporting they have improved transparency and control of cloud costs. A full 80% planned to increase their investment in financial operations (FinOps) to achieve this, and 39% said they would use cloud-native tools to reduce licensing costs.

Those efforts suggested IT leaders are being very deliberate in their approaches to reining in costs while at the same time embracing best practices, said Thomson. IT leaders have finally started to realize the cloud is not so much a destination for workloads as much as it is an operating model, he added.

The challenge is that cloud computing environments are becoming more complex to manage as organizations deploy cloud-native applications on Kubernetes clusters and serverless computing frameworks deployed alongside legacy monolithic applications that were lifted and shifted to the cloud. Organizations will need to invest more in automation to make up for an IT talent gap that prevents organizations from accelerating the rate at which they can build and deploy cloud applications, noted Thomson.

On the plus side, it appears organizations are willing to allocate budgets to achieve their IT goals. The issue is that, as more organizations become more dependent on software, they are asking IT teams to do even more with the resources at hand. The degree to which that can be achieved, of course, is almost wholly dependent on how much of the technical debt that already exists in the cloud can be retired.