No sign of slowdown in Australian corporate IT investment finds study

Angeline Maronese, Managing Director for ANZ at Rackspace Technology

Despite the rise of inflationary pressures and a global economic slowdown, few Aussie firms are scaling back on IT investment and most are committed to spending more, according to Managing IT in Challenging Economic Times a survey of over 1,400 global IT professionals conducted by Rackspace Technology®, the leader in end-to-end multicloud solutions.

What were the findings of the survey?

Though survey respondents identified the economic slowdown, inflation and rising energy as the three leading factors impacting their organisations, almost half (49%) of Australians say that investment in technology has actually increased as a result of these pressures, while only 29% of the respondents say they have investing less, and 21% say they have maintained the same level of investment but have reprioritised based on evolving needs.

Looking forward, 64% of Aussies surveyed say the current economic climate is leading them to invest more in IT infrastructure, while only 36% plan to reduce their overall investment.

Seeking Efficiencies Through the Cloud, Innovation

According to the research, IT firms are adopting varied approaches to adjust to the economic climate, led by an increased focus on cloud projects that can drive efficiencies (62%) and investment in innovation projects (58%). Across all global regions, leaders identified cloud projects as the single most important factor in navigating the current economic climate, as well as the leading source of re-prioritised investment versus their original budget allocation.

Moreover, when asked to rank their leading areas of investment focus for the next 12 to 18 months, Australian respondents highlighted cloud operations as the most important strategic IT priority, at 80%, followed by security (66%) and digital transformation (55%).

More than 33% of Australian respondents also say they either have already moved or plan to move all of their IT infrastructure to the cloud, while a further 43% only expect a small percentage of infrastructure (between 1% and 10%) to never move to the cloud.

As they increase their cloud investments, firms are also becoming more sophisticated at managing cloud costs and deriving value from their investments. Two-thirds (67%) of Australian respondents said that their firm had established FinOps capabilities, with 85% saying that their firm’s FinOps capabilities are either of medium maturity or high maturity.

Even in Tougher Times, Talent Remains Scarce

Even amidst economic uncertainty, IT organisations are still facing a tough talent environment. 61% of Australians said they are struggling to fill technical vacancies, especially in the areas of cybersecurity (62%), machine learning (57%), data analytics (55%), data engineering (46%), cloud architecture (38%) and network engineering (36%).

Also 61% of the firms are struggling to retain IT staff with specific in demand skills. They are thus offering additional training opportunities (67%), increasing the value of rewards (65%), instituting salary increases (57%), making work/life balance improvements (38%), etc.

Over half of respondents globally (52%) and Australian (57%) said their organisation is downsizing employees. In addition, Aussie organisations are reducing their Human Resource teams by over two thirds (67%) compared to globally (56%), making the same changes to their sales and marketing teams (47% vs 49%), and IT operations (30% vs 38%).

Given talent scarcity, 85% are looking for ways to enable tech to perform work traditionally performed by humans, especially in customer service (63%) and IT operations (66%).

What do the findings mean for businesses?

Jeff DeVerter, Chief Technology Evangelist at Rackspace Technology

Commenting on the research findings, Jeff DeVerter, Chief Technology Evangelist at Rackspace Technology, said, “Though economic conditions have shifted, it’s clear that firms are still fighting against a very challenging market for talent, especially in key priority areas.”

“Finding new ways to leverage technology to address some of these shortfalls can help companies navigate the next 12-18 months, as will strategic use of outside resources.”

“Despite the economic headwinds, firms are increasingly investing in their IT expenditures to weather these uncertainties. In fact, the survey results show a doubling down on technology investments, as firms continue to reap the rewards of cost efficiencies and overall return on investment,” said Angeline Maronese, Managing Director for ANZ at Rackspace Technology.

“It’s clear, leaders have listened to their IT professionals and have recognised technology remains at the core of growth and competitiveness,” Angeline Maronese further added.

“With budget cuts from economic slowdown top of mind, being smart about the types of technology you adopt is key. Early adoption of cloud transformation projects provides the scalability, innovation, cost-effectiveness, and flexibility needed to enable IT teams to deliver on their technology investments. In addition, ensuring organisations have a comprehensive FinOps strategy will be crucial to navigating future economic instability,” added Maronese.