Is spending on technology spinning out of control?

An overwhelming majority of companies are spending more on information technology (IT) year over year, but many of those companies aren’t aware that they’re in the majority.

“This perception creates intense pressure on technology leaders to justify spend,” wrote the authors of a recent survey shedding light on IT spend. “When organizations think they’re overspending relative to competitors, they become defensive rather than strategic, and cost-cutting becomes the primary priority.”

In the ebook The State of B2B Software & AI Spend, a survey of 310 U.S. executives in procurement, IT, and finance by consulting firm West Monroe, the authors found that 86% of companies increased IT spending in the past 12 months and 85% expect the same in the next 12 months.

Just 3% thought they spent less than peers, and nearly two-thirds (63%) said they believe they spend more on IT than their industry peers do.

Other useful findings from the survey include:

• 63% of leaders report spending 7% or more of company revenue on IT.

• 23% said that 10% or more of their IT budget is allocated to artificial intelligence (AI) initiatives. A survey-high 42% selected “scaling AI and data capabilities” as their company’s top priority for technology investment over the next 12 months — twice as popular as the second-most popular response (“improving cybersecurity and risk resilience”).

• 91% said they believe that AI investments will increase overall tech spend over the next 12 months, including 47% who said the expected increase would be “significant.”

• While 25% said they expect AI initiatives to significantly increase internal headcount over the next 12 months, just 1% said they expect AI initiatives to significantly decrease internal headcount.

— To comment on this article or to suggest an idea for another article, contact Bryan Strickland at Bryan.Strickland@aicpa-cima.com.