Whether you plan to stay with your existing ERP solution or are looking for a new system, you may be facing one of the most important decisions – whether to choose a cloud solution or install a solution on local servers. In making this decision, it may be useful to look at the current trends in manufacturing spending and examine the reasons for the shift in priorities.
2022 IT Spending Analysis
According to a recent survey report by Spiceworks Ziff Davis, the majority of businesses (53%) expect an increase in IT budget spending in 2022, and 72% of manufacturing and retail companies anticipate revenue growth this year. The size dependency is interesting, with 63% to 65% of businesses with 500 or more employees expecting to increase their IT budgets, while only 45% of smaller businesses have similar plans. You can see how they plan to divide the budget here.
Prioritization of IT projects
According to the aforementioned report, one of the main motives for investments in IT in 2022 will be the implementation of specific IT projects (49%) and the need to modernize the IT infrastructure (47%). The third most frequently cited reason is increased security concerns (44%).
Among businesses with 500 or more employees, IT projects and security concerns are the top two priorities, while upgrading outdated structures is no longer such a priority. However, for businesses with 100 to 499 employees, 58% said they needed to modernize their IT infrastructure. This suggests that the largest companies surveyed have upgraded their IT infrastructure in recent years, giving them an advantage over smaller competitors.
Hardware
Companies still spend around 30-44% of their IT budget on upgrading and maintaining hardware. Interestingly, companies with more than 500 employees plan to spend only 27% of their budget on hardware, indicating that a greater number of them have already moved to cloud solutions. Companies with 100 to 499 employees spend the most on hardware, namely 33% of their budget.
The smallest companies surveyed plan to spend 21% of their budget on laptops and 19% on desktops, indicating that a larger percentage of their employees have fixed workstations. Larger companies plan to spend 12% on desktops and allocate more of their budgets to mobile devices, networking and improving security.
Cloud and managed services
In 2022, 21% of the IT budgets of the larger companies surveyed will go to managed services, compared to just 14% for smaller companies.
Operating systems and virtualization software
According to the survey report, the share of the budget dedicated to operating systems and virtualization has decreased since 2020. However, as with other types of expenses, this depends on the size of the company.
Companies with 500 or more employees spend 11% of their budget on operating systems, while the smallest companies spend 13%. Spending on virtualization software also varies by company size, with the largest companies spending 8% on virtualization and smaller companies needing 10%.
This difference suggests that larger companies are moving faster to cloud-based systems compared to smaller ones. The difference in overall percentage points for this type of infrastructure spending appears small. However, when the relative size of IT budgets is taken into account, the resulting sum is much larger. This puts smaller companies at an even greater disadvantage in terms of their ability to improve and modernize their enterprise systems by moving to the cloud.
Managed and cloud services
Larger companies that participated in the survey plan to invest a greater proportion of their budgets in areas related to the transition to the cloud. For example:
• Infrastructure as a service: 7% versus 6% for smaller companies
• Security: 7% versus 5-6%
• IT administration: 6% vs. 5%
Although the percentage difference is small, the real expenditure is again much higher. But the most important finding is that larger companies are adopting cloud and managed services faster than smaller ones. Small and medium-sized enterprises are therefore at a disadvantage in terms of flexibility and adaptability.
ERP deployment in the cloud
As a portion of IT budgets gradually shifts to deploying business solutions in the cloud, companies will increasingly need to rely on their ability to quickly adapt to business and supply chain changes. Companies that rely on legacy ERP solutions quickly find that maintaining flexibility becomes increasingly difficult and costly.
Moving to cloud ERP makes sense for companies of all sizes because it allows them to immediately free up IT budgets for key projects instead of replacing or maintaining legacy hardware or software. Adaptive ERP solutions change and evolve with the business thanks to the possibilities of a modular structure built on a modern platform.
Opening PHOTO: Freepik on Freepik.com
Source: www.nextech.sk
