Flexera 2021 State of Tech Spend Provides Insights into IT Cost Visibility

Sales IntelligenceDigital workspace platforms

By STS News Desk On Jan 13, 2021

Study Shows Significant Opportunity for Companies to Manage IT Spend and Re-Invest Savings in Digital Transformation

Flexera, the company that helps organizations maximize business value from their technology investments, announced the findings of the Flexera 2021 State of Tech Spend Report. A part of the Flexera State of series of reports, the Flexera State of Tech Spend Report provides insight into current and future technology spend from the perspective of enterprise CIOs and IT executives. The report highlights how companies are shifting spending to support their critical IT initiatives, how they’re tracking and managing IT spend, and the challenges they face in optimizing spend.

Survey respondents are IT executives working in large enterprises with 2,000 or more employees, headquartered in North America and Europe, encompassing industries such as financial services, retail, e-commerce and industrial products. More than half are C-level executives.

“Enterprises are under enormous pressure to increase innovation and reduce IT spend,” said Jim Ryan, President and CEO of Flexera. “In chasing innovation, we continue to see a significant, some would say unsustainable increase in cloud spending.”

“However, cloud isn’t the end game itself nor is it even close to the entire story,” continued Ryan. “We expect the ability to both see and manage the entirety of IT spending—across cloud, on-prem and SaaS— as a strategic imperative for any enterprise spending 10’s of millions or more on IT. Only after companies gain this visibility can they map this spend back to business services and ultimately to business outcomes.”

Key highlights from the Flexera 2021 State of Tech Spend Report:

Increase in IT spending in 2021: Almost half (49 percent) of companies globally expect to increase IT spending in 2021. Almost one in five (19 percent) expect to keep IT spending the same and 32 percent expect it to decrease.
COVID-19 is impacting cloud spend: COVID-19 has driven cloud spend up and on-premises software spend down. This isn’t surprising as organizations turn to SaaS and move more apps and data to cloud to support employees working from home. Organizations are also transitioning more activities to cloud as business shifts online. More than half (57 percent) said they increased spend to-date for SaaS due to COVID, and 49 percent said they increased public cloud spend; 36 percent said they decreased spend on on-premises software.
Cloud spend passes on-premises: Cloud spend has expanded its lead over on-premises software spend. Cloud spend represents 30 percent (20 percent IaaS/PaaS and 10 percent SaaS); up from a total of 25 percent in 2020. On-premises software represents 24 percent of IT spend (up from 22 percent in 2020).
Initiatives around cost savings will triple: Cost savings as a top initiative will triple, from nine percent in 2020 to 27 percent in 2021.
Business services pose the top challenge for visibility into IT spend: More than half of respondents (51 percent) say that reporting on spend by business service is the top challenge in gaining visibility into IT spend.
Number of data centers is decreasing: More than a quarter of respondents (27 percent) say they will “reduce significantly” the number of data centers in 2021, while seven percent plan to eliminate data centers completely. A total of 14 percent said they would increase somewhat (11 percent) or significantly increase (three percent) the number of data centers.
Top vendors: Microsoft remained the largest vendor for 47 percent of respondents. AWS was the largest vendor of 22 percent of respondents. Oracle, SAP and IBM/RedHat followed, each reported as the largest vendor for six percent of respondents.
Microsoft to benefit most from changes in vendor spend: Sixty-one percent of respondents said they expect to increase spend on Microsoft Azure in 2021; 57 percent plan to increase spend on Microsoft SaaS software; 54 percent plan to increase spend on AWS; and 46 percent plan to increase spend on Microsoft licensed software. The products that will see the greatest reduction are Oracle licensed software (25 percent of respondents are planning to decrease spend); and IBM licensed software (23 percent of respondents planning to decrease spend).
Automation and AI/Machine Learning: A total of 73 percent said they will increase spend around automation and 64 percent AI/Machine Learning.

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