Tech leaders are gearing up for expanded IT budgets in 2025, pointing to the broader recognition of technology’s growing importance in business strategy and operational success.
According to Forrester’s research, 90% of surveyed tech and business decision-makers anticipate an increase in IT spending next year, further reinforcing the belief that technology will continue to drive business transformation and maintain competitive advantage.
IT budgets are set to surge in 2025
As 2025 approaches, tech executives are preparing for larger IT budgets to meet the demands of a rapidly changing digital market. The push for digital transformation, coupled with the need for greater agility, means that businesses are prioritizing their IT spending.
90% of tech leaders are banking on bigger budgets
Among the surveyed tech and business decision-makers, 90% are counting on increased IT budgets for 2025. This near-universal anticipation of higher spending is seen as a collective recognition of technology’s role in shaping future business success.
As companies look to strengthen their digital infrastructure, improve customer experiences, and explore new revenue streams, the willingness to invest more heavily in IT becomes apparent.
Surging budgets also point to strategic alignment between business goals and technology investment, where tech isn’t seen as a cost center any longer—but rather as a key growth and innovation enabler.
Software and talent take the budget spotlight
A major portion of the anticipated budget increases will be allocated to software and technical personnel. With 75% of executives predicting larger budgets specifically for these areas, the focus is clear—businesses are prioritizing the acquisition and development of technological expertise and tools that can drive their digital agendas.
This shift is largely being driven by growing enterprise appetites for AI capabilities and broader modernization initiatives.
As AI continues to evolve and become more integrated into business processes, the demand for skilled technical personnel and advanced software solutions will only intensify.
Growth vs. inflation: How IT budgets will hold up in 2025
Tech spending is set to grow in 2024 and in the coming years, but this growth comes with challenges.
While Forrester projects a 5.3% year-over-year increase in tech spending for 2024, up from 4% in 2023, this increase may not be as impactful as it seems due to the pressures of global inflation. Real-world impacts of this increase could be muted by external economic factors.
Companies must manage this growth carefully, balancing their ambitions with the realities of financial constraints.
Why budget increases might just be keeping up with inflation
Global inflation, currently averaging 5.9%, poses a major challenge to the anticipated increase in IT budgets. While a 5.3% rise in tech spending is projected, this figure may simply align with inflation, meaning that in real terms, the budget increase might only serve to maintain current levels of investment rather than expand them.
This scenario is forcing tech leaders to think strategically about how they allocate their resources, making sure any additional spending delivers measurable value and offsets the eroding effects of inflation.
Efficiency, innovation, and revenue growth
In today’s competitive market, business leaders are clear about their technology priorities. Their focus is on acquiring technology that can streamline operations, improve efficiency, and drive innovation—all with the ultimate goal of boosting revenue.
Streamlining ops and fueling innovation
Streamlining operations and driving innovation are at the top of the agenda for many business leaders. Technology choices made in 2025 will reflect this, as companies seek solutions that can simplify processes, reduce overhead, and accelerate their ability to bring new products and services to market.
The goal here is to create a more agile organization that can respond quickly to market changes and customer demands.
Managing volatile markets without blowing the budget
The economic landscape in 2025 is likely to be turbulent, with global volatility and an election year adding layers of uncertainty. This unpredictability requires business leaders to be cautious with their spending, making sure they achieve the desired outcomes without overspending.
Careful budget management will be of primary importance, as organizations aim to strike a balance between investing in critical technologies and maintaining financial stability.
Digital transformation’s hidden costs and the challenges ahead
Digital transformation is a priority for many organizations, but it comes with hidden costs that can strain budgets and delay progress. Understanding and managing these costs is key for successful implementation.
Digital transformation’s price tag
As organizations pursue digital transformation, they typically encounter unexpected expenses. Increased cloud usage, for example, can quickly lead to rising costs, especially when not managed effectively.
Costs here are compounded by the need for continuous investment in new technologies, training, and process improvements. For CIOs, the challenge lies in balancing these costs with the need to deliver tangible results that justify the investment.
More usage, higher costs
The shift to cloud computing has cut both ways for many organizations. On one hand, it offers flexibility, scalability, and access to advanced tools and services. On the other hand, increased usage can drive up costs greatly, often outpacing the initial savings that were expected.
For many CIOs, managing these escalating costs has become a key concern, particularly as more workloads migrate to the cloud.
Compute power costs skyrocket
Generative AI is one of the most exciting developments in the tech world, but it comes with a hefty price tag. High demand for computing resources needed to support generative AI has driven costs through the roof.
Despite the potential benefits, many organizations find that these costs do not always translate into measurable returns, which has led to increased scrutiny of AI investments, as businesses seek to make sure they’re getting value for money.
Why long-term planning is critical
Forrester’s research shows that 90% of respondents expect to increase their spending on AI-related data infrastructure, talent, and tools within the next 12 months—pointing to the growing importance of AI in driving business outcomes.
Without a broad and flexible long-term strategy, however, there is a real risk that these investments could be wasted. It’s critical to develop a clear plan that considers the full lifecycle of AI implementation, from initial setup to ongoing maintenance and optimization.
Avoid wasting AI dollars with a short-sighted approach
Forrester warns that without a comprehensive strategy, AI investments could end up being wasted. The key to success here lies in developing a modern data platform and making sure the capability to run AI workloads across different environments, including PCs, data centers, and the cloud. This is key for maximizing the value of AI investments and avoiding the pitfalls of short-term thinking.
How to optimize costs amid ballooning AI and cloud expenses
As AI and cloud expenses continue to rise, organizations must adopt smart spending practices to optimize their budgets and get the most out of their investments.
CIOs face the challenge of managing soaring AI and cloud costs while still driving business growth. Forrester recommends that organizations defend or even increase their investments in cloud usage optimization.
Businesses must trim costs in targeted areas if they’re to mitigate the financial impact of AI workloads and make sure their spending aligns with their long-term goals.
Best practices for optimization
Optimizing cloud usage is key for managing costs effectively, including implementing practices such as monitoring and adjusting usage patterns, leveraging cost-saving tools and services, and continuously reviewing and refining cloud strategies.
Through keeping cloud costs in check, organizations can free up resources to invest in other important areas, such as AI development and talent acquisition.
Balancing talent and tech investments
To balance the rising costs of AI, cloud, and tech talent, CIOs should explore many different cost-cutting measures—including renegotiating contracts, outsourcing non-core functions, and streamlining operations. The goal here is to maintain a strong focus on growth and innovation while making sure spending remains sustainable.
Tackling technical debt for a leaner future
Technical debt has become a major issue for many organizations, leading to inefficiencies and increased costs. Tackling this debt is key for creating a leaner, more agile business.
Eliminating siloed apps to reduce tech sprawl
Siloed applications and technology sprawl have created major challenges for businesses. Years of independent application development by different teams have led to fragmented technology that is difficult to manage and costly to maintain.
To streamline operations and reduce technical debt, enterprises must take a hard look at their current infrastructure and identify opportunities to consolidate and simplify.
How siloed apps inflate technical debt
Siloed applications are a major contributor to technical debt. These systems, typically developed in isolation by different teams, lack the integration and interoperability needed to function efficiently within a larger IT environment.
This ultimately leads to increased maintenance costs, reduced agility, and a higher risk of system failures. Addressing this issue requires a coordinated effort to break down silos and create a more cohesive technology infrastructure.
Streamlining tech by replacing legacy systems
Replacing legacy systems and bespoke applications that serve only a few functions is a critical step in reducing technical debt. Organizations must inventory and assess the current technology stack to identify outdated or redundant systems that are no longer providing value.
Replacing these with more modern, integrated solutions can lead to major cost savings, improved performance, and a more streamlined IT environment that supports business growth.
Final thoughts
As you plan for the future, ask yourself: Are your technology investments truly aligned with your long-term business goals, or are they simply reacting to short-term pressures?
In a world where innovation drives survival, how will you make sure every dollar spent on IT fuels growth while securing your brand’s place in an increasingly competitive market?
