How Shrinking Budgets Are Affecting IT Departments — The Evolution of the IT Decision-Maker, Part II

Do more with less.

That’s the demand of IT decision-makers. Even though IT salaries are currently on the rise, department budgets are heading in the opposite direction.

Our recently-released 2017 IT Skills and Salary Report illustrates a troubling cycle. Budgets are tightening and not enough money is being set aside for professional development. This has led to a sharp increase in skills gaps, which often results in missed goals, delayed deployments and an overall drop in job satisfaction. This chain of events is disrupting IT departments around the world.

Budget limitations are especially frustrating for decision-makers who are looking to strengthen their team through professional development. According to our report, 80 percent of managers believe training increases staff effectiveness while a whopping 94 percent say certifications benefit their employees. And yet, 39 percent of our survey respondents say they don’t train because there’s not a budget for it.

The outlook is even bleaker when you analyze a decade of survey responses. We started asking IT decision-makers in 2010 whether they planned to authorize training in the ensuing year. Sixty percent said they planned to. That number grew to 80 percent in 2012, but has since fallen sharply, bottoming out at 57 percent in 2016. Decision-makers understand the direct benefits of training, but they can’t authorize it if they don’t have the proper funds.

Actual Budgets vs. Forecasted Budgets

Global IT budgets are shrinking. According to our report, the percentage of decision-makers managing a budget of $3 million-plus has shrunk from 25 percent in 2015 to 21 percent in 2017. Conversely, the percentage managing a budget of $250,000 or less has risen from 31 percent to 41 percent over the same three-year span.

Budget 2015 2016 2017
Up to $249,999 31% 38% 41%
$250,000 – $499,999 13% 16% 14%
$500,000 – $999,999 12% 10% 10%
$1 million – $2.9 million 19% 14% 14%
$3.0 million+ 25% 22% 21%
Total 100% 100% 100%

As for budget predictions, 39 percent of our survey respondents in the United States and Canada expect a budget increase in 2017, down from 50 percent a year ago. That number ranges between a high of 47 percent in the Asia-Pacific region and a low of 32 percent in Europe, the Middle East and Africa (EMEA).

The number of decision-makers expecting a budget decrease is also trending in the wrong direction. In the U.S. and Canada, 22 percent of respondents foresee a budget decline compared to 18 percent of respondents in 2015 and 2016.

Bouncing Back from the Recession

While expectations are trending downward, when you examine an entire decade’s worth of data, IT departments are in a better place today than they were 10 years ago.

During the economic recession from 2008-2010, IT budgets were slashed. According to our survey respondents in 2009, 84 percent had imposed cost-cutting measures. Budgets slowly improved in ensuing years, increasing by 10 percent from 2010 to 2011. By 2015, the training budget per employee had grown by more than 20 percent.

Another trend to note—budget optimism directly correlates to the belief that business is good. The percentage of respondents who classified “business as good” rose from 14 percent in 2013 to a high of 28 percent in 2016—the same year budget optimism was at its peak.

2015 2016 2017
Business is good 25% 28% 22%
Expect a budget increase 47% 50% 38%

Will Budgets Continue to Tighten?

IT budgets have increased since the recession, but the fear is that they’ve hit their ceiling and will continually fall off. Our data from the last couple years support that trend.

A bounceback is conceivable, however, if global IT spending increases. According to research firm Gartner, global IT spending is forecast to grow 1.4 percent in 2017 and 2.9 percent in 2018. Those numbers are up from 0.4 percent growth in 2016 and a 6 percent decline in 2015.

Budget size directly affects training, which in turn can hurt productivity, increase employee stress and lead to a massive spike in skills gaps. Last year alone, the percentage of IT decision-makers reporting skills gaps increased by 38 percent. That’s a concerning statistic.

Not surprisingly, these skills shortages are the number one area of concern for decision-makers. The best way to plug those gaps is by training current staff, which can be difficult if IT budgets are already stretched thin.

Stretch Your Budget with Special Offers

To maximize your budget, try taking advantage of our special offers. We have options like Cool Stuff, which provides rewards on eligible courses, or BOGO discounts to help you continue on your skills development path. We also have special discounts for government, military and education personnel.

For teams and organizations, our volume pricing programs enable you to lock in reduced rates on multiple courses.

We also accept vendor-specific payment options, such as Cisco Learning Credits (CLCs) and Microsoft Software Assurance Training Vouchers (SATVs).

These are just some ways to get the most for your training money.

Take Advantage of All Training Resources

For decision-makers, finding training opportunities for staff is crucial. It doesn’t make sense to wait around and hope your budget grows—you’ve got to find ways to develop your employees’ skills sooner rather than later. If your company funds training, make sure your staff follows through. If your company doesn’t fund training, try to arrange for webinars, seminars or other informal learning sessions at work. A great place to start is in our IT resource library full of free white papers, webinars, videos and more.

Skills development is the only way to attack skills gaps. So make sure to maximize your IT budget by doing your homework and focusing on the essential skills that your department needs.

NOTE: This blog is the second in a three-part series about the changing philosophies of IT decision-makers. The recent release of our 2017 IT Skills and Salary Report marks the 10th straight year we’ve surveyed IT professionals. With a full decade’s worth of data, we decided it was time to analyze all of the numbers together and uncover any noteworthy trends.

Read the other two blog posts in this series, “Training is an Investment, Not an Expense” and “What Drives IT Pros to Change Jobs?”

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