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Technology spending by firms around the world is increasing at a rate of 8.6% per year, according to a new report. The study reveals that operational costs are growing faster than revenues, and that companies are making future-proof investments in technology to stay ahead of the competition.
The study, conducted by Forrester Research, found that companies in North America and Europe are spending the most on technology, with an average of $9.7 billion and $8.4 billion respectively. However, Asia-Pacific firms are not far behind, with an average spend of $7.9 billion.
"Firms are turning to technology to help them drive growth and competitiveness," said Forrester analyst Andrew Bartels. "As a result, they are making future-proof investments in areas such as cloud computing, big data, and mobile." However, the study also found that operational costs are growing at a faster rate than revenues, with firms spending an average of $1.2 billion more on technology than they did last year. Bartels attributes this to the fact that "companies are struggling to keep pace with the rapidly changing technology landscape."
Despite the increase in spending, the study found that companies are still not fully prepared for the future. Only 33% of firms said they were very or extremely prepared for the digital future, while 40% said they were somewhat prepared.
"The findings reveal a disconnect between how prepared firms think they are for the digital future and how prepared they actually are," Bartels said. "As the pace of change accelerates, firms need to do more to future-proof their businesses."
The increase in tech spending can be attributed to an increase in tech costs and the shift to subscription software. Plus, firms’ transformation to hybrid operations made a big impact on overhead expenses, and the increased need for more technology, including personal technology like laptops and tablets, as well as cyber security, collaboration and business development technology is one of the top reasons. Looking ahead, firms need to double down on their investments in technology to remain competitive, but are wary in anticipation of the imminent economic downturn. Increasing investments now before the marketplace grows more volatile and than pausing investments is not a fail-safe approach to guarantee operational sustainability in the wake of an economic storm. With an equipment finance solution, firms can access funds needed to lease or purchase the latest tools and technologies to stay ahead of the curve and remain competitive and keep their debt levels low at the same time. By using leasing to acquire new technologies, firms can avoid taking on large amounts of debt. This can help to preserve the firm's financial health and flexibility as rates continue to rise and bank lines increase. We can help you understand the value of strategic financial solutions like leasing and financing. Leasing and financing helps firms cut IT costs, streamline operations and keeps your department on budget while optimizing your IT spend by:
Creating flexibility at the end of the lease to refresh, change platforms, or buy
Matching the useful life of IT assets to payments
Improving security and compliance with active auditing of assets, including mobile asset management built-in
Leveraging custom, creative structures including one-time payments and self-funding
Leveraging Section 179 Tax Deductions
Financing 100% of software – including training, implementation and consulting fees
At CoreTech, we want to help you cut your leasing costs, save you money in the future, and educate you about how leasing works. If you have a lease already, check out our lease cost analyzer. We will give it a close look to make sure there are no-gotcha clauses or fees. It's free with no obligation! Visit https://www.coretechleasing.com/services to get started! Have any questions? Contact us at info@coretechleasing.com today! We are happy to take a consultative approach to help push you in the right direction.