February 2, 2023

Tech Spending Expected to Rise as Pandemic Restrictions Ease, Economy Improves

Liberty Mutual Group Chief Information Officer

James McGlennon

plans to spend more this year on the software and tools behind digital experiences customers became accustomed to during the pandemic.

“Our investments in data, analytics, [and] artificial intelligence help us to create new experiences for quoting, binding, payments and claims,” Mr. McGlennon said, adding that the insurer will also invest more in data analytics and cybersecurity.

CIOs at U.S. companies across several industries are expected to spend more on software in 2021, with an emphasis on software related to process automation, artificial intelligence and security. Market researcher

Forrester Research Inc.

last week raised its forecast for enterprise technology spending for this year, citing stimulus funding and stronger-than-expected economic data.

As pandemic restrictions ease, information technology budgets at U.S. businesses and governments are now projected to rise to nearly $2 trillion this year, up 7.4% from 2020, according to the Forrester report.

In December, Forrester projected IT spending would fall 0.4% this year, compared with increases of 6.7% in 2019 and 1.8% in 2020. Then in April, Forrester forecast budgets would grow 6% year-over-year in 2021.

The upward revisions reflect the impact of an economic stimulus package President Biden signed into law in March, said

Andrew Bartels,

a research analyst at Forrester.

Of all spending, communications equipment is the fastest-growing spending category, forecast to rise 13.2% this year. Spending in the category fell last year as people moved to remote work, but it is expected to pick up again as offices reopen, Mr. Bartels said. Forrester in April forecast communications equipment spending would increase 12.4% this year.

James McGlennon, CIO at Liberty Mutual Insurance Group.



Photo:

Liberty Mutual Insurance Group

“Activities are coming back again,” Mr. Bartels said. “And as they do so, [businesses] become buyers of technologies to support the reopening.”

Cambia Health Solutions Inc. plans a double-digit increase in spending on artificial intelligence and consumer-facing applications this year even as its overall IT budget remains flat. The Portland, Ore.-based healthcare company is transitioning to a post-pandemic hybrid work environment, according to

Laurent Rotival,

its CIO.

“We are increasing our focus and spend on the accelerated evolution of our network and infrastructure to serve employees, partners, customers, and health plan members anywhere,” Mr. Rotival said.

Edward Wagoner,

digital CIO of

Jones Lang LaSalle Inc.,

said more data tools and capabilities are a top priority for some of the commercial real estate services company’s customers.

Adopting a hybrid approach to work is an important factor in retaining top talent, Mr. Wagoner added, and companies need to be equipped to collect and analyze those preferences.

Software spending, the second-fastest growing segment of IT spending, is forecast to rise 10.4% this year, compared with an April forecast of 9.7% growth. Mr. Bartels said many companies are greenlighting new software spending after taking a cautious approach in 2020.

Within software, spending on platforms for process automation and AI are projected to grow 33% and 13%, respectively, this year. Security software spending is projected to grow 11%.

Spending on software will reach $482 billion in 2022, according to Forrester, marking the first time it will surpass CIO staff spending, which is forecast at $470 billion next year.

Write to Jared Council at [email protected]

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Related Posts

Former WeWork Chief’s Gargantuan Exit Package Gets New Sweetener

May 27, 2021

May 27, 2021

Nearly two years ago, SoftBank Group Corp. 9984 -2.20% sought to part ways with WeWork co-founder Adam Neumann when it...

Amazon Nears Deal to Buy Hollywood Studio MGM

May 24, 2021

May 24, 2021

Amazon.com Inc. AMZN 1.51% is nearing a deal to buy the Hollywood studio MGM Holdings for almost $9 billion, said...

Warren Buffett Says He’s Quitting Gates Foundation

June 23, 2021

June 23, 2021

May 2, 2015 – Omaha, Nebraska, U.S. – WARREN BUFFETT and BILL GATES discuss newspaper tossing skills at the 50th...

Hong Kong’s Apple Daily Considers Closing Unless Government Releases Funds

June 21, 2021

June 21, 2021

HONG KONG—The publisher of the popular pro-democracy Apple Daily newspaper said it may cease publishing after authorities froze its assets...

China’s Factory Activity Slipped in May, but Consumer Spending Held Up

May 31, 2021

May 31, 2021

BEIJING—An official gauge of Chinese factory activity slipped in May on weaker export demand and higher commodity prices, while the...

North Face Owner Pulled Xinjiang Criticism, Then Reinstated It

June 20, 2021

June 20, 2021

In late March, the maker of North Face jackets and Vans sneakers quietly took down a statement raising concern about...

Pfizer Suspends Global Distribution of Chantix Smoking-Cessation Pill on Contamination Concerns

June 25, 2021

June 25, 2021

Pfizer Inc. PFE 0.03% has suspended distribution world-wide of antismoking pill Chantix and recalled some lots after finding they contained...

Facebook Critics Regroup in Bid to Reshape the Digital Behemoth

June 30, 2021

June 30, 2021

Critics of big tech firms cheered after prosecutors and lawmakers made moves against Facebook Inc. and its peers. Recent developments...

Amazon and Other Tech Giants Race to Buy Up Renewable Energy

June 23, 2021

June 23, 2021

The race to secure electricity deals for power-hungry data centers has tech companies reshaping the renewable-energy market and grappling with...

Consumers Are Back Out Spending, Driving the Recovery

June 25, 2021

June 25, 2021

Consumers likely increased spending last month on services that they shunned earlier in the Covid-19 pandemic, helping fuel the broader...

IRS Is Investigating Release of Tax Information of Wealthy Americans

June 8, 2021

June 8, 2021

WASHINGTON—Federal authorities are investigating the release of wealthy Americans’ tax information, Internal Revenue Service Commissioner Charles Rettig said Tuesday. ProPublica,...

New York Attorney General Probe of Trump Organization Now a Criminal Investigation

May 19, 2021

May 19, 2021

New York state Attorney General Letitia James at a news conference in August last year. Photo: Kathy Willens/Associated Press Updated...

Biden Policies Would Help Unwind Destructive Forces of Inequality, Climate Change, Yellen Says

June 16, 2021

June 16, 2021

Treasury Secretary Janet Yellen is set to testify before the Senate Finance Committee on Wednesday. Photo: Jacquelyn Martin/Associated Press June...

Chinese Regulators Target Ride-Hailing Company Didi Just Days After IPO

July 2, 2021

July 2, 2021

Chinese regulators zeroed in on Didi Global Inc. on Friday, days after the ride-hailing company went public, by blocking its...

Fed Officials Stress Bond Buying Isn’t Aimed at Boosting Housing Market

June 22, 2021

June 22, 2021

Federal Reserve Bank of New York President John Williams said central bank bond buying is designed to help create widespread...