A Grassroots® Research study shows that more than 80% of IT decision makers in the US plan to spend more on information tech this year, thanks in large part to recent tax reform. Almost three-quarters said their organisations have at least one or more artificial intelligence-related projects in progress.
The IT spending environment is looking strong for 2018, according to a recent Grassroots® study of IT decision makers in the US
Most of the approximately 200 survey respondents said their overall 2018 IT budgets are expected to increase
IT security is by far the highest spending priority for 2018, with AI one of the primary focus areas over the next five years
A new study by Grassroots® Research – Allianz Global Investors’ proprietary in-house research division – found that the information-technology (IT) spending environment in the US is looking strong for 2018, and that artificial intelligence (AI) is among the top priorities for IT departments. The Grassroots® study was conducted among approximately 200 IT decision makers at US companies with more than 100 employees in a range of industries.
US tax overhaul is a boon to corporate IT spending
More than 8 out of 10 respondents said they expect their overall 2018 IT budgets to increase relative to last year, and roughly 6 out of 10 said the December 2017 US tax bill would provide a boost. The bill is expected to lift corporate cash flows with its lower corporate tax rate – the largest one-time reduction in US history – as well as its higher deductions for capital spending and lower levies on repatriating overseas profits.
Most respondents expect their 2018 IT budgets to increase
Question: How do you expect your overall 2018 IT budget to compare to 2017?
Source: Grassroots® Research. Data as at May 2018.
IT security and artificial intelligence are among firms’ top priorities
Given the increasing number of high-profile cyberattacks in recent years – notably the Equifax data breach and WannaCry ransomware attack in 2017 – we were not surprised to find that more than a quarter of our survey respondents cited IT security as their biggest spending priority for 2018. This was the most frequently cited focus area, followed by mobile, networking and AI.
Over the next five years, survey respondents expect artificial intelligence to have an outsize effect on their companies – roughly on par with the influence of technologies such as the “internet of things” (IoT), big data and cloud computing. Almost three-quarters said their organisations have at least one or more AI projects in progress. Companies are using AI to improve customer service, provide more advanced analytics, create innovative products and services, lower expenses and increase speed to market.
Most companies are working on at least one AI-related project
Question: What is the current level of AI adoption in your organisation?
Source: Grassroots® Research. Data as at May 2018.
Investing in innovative technologies
Given the findings of the study, IT security and AI – along with other rapidly developing, cutting-edge technologies – clearly seem to be investment areas worth exploring.
“Companies are increasingly focused on investing in innovative technologies – like IoT, big data, cloud computing and AI – that can transform their business for years to come,” said Stephen Jue, a Senior Technology Research Analyst at Allianz Global Investors. “This Grassroots® study supports the investment theme of a stronger spending environment for IT, and it reiterates the importance of actively looking for the potentially winning firms in this competitive high-tech environment.”
Grassroots® Research is a division of Allianz Global Investors that commissions investigative market research for asset-management professionals. Research data used to generate Grassroots® Research reports are received from independent, third-party contractors who supply research that, subject to applicable laws and regulations, may be paid for by commissions generated by trades executed on behalf of clients.
Some or all the securities identified and described may represent securities purchased in client accounts. The reader should not assume that an investment in the securities identified was or will be profitable. The securities or companies identified do not represent all of the securities purchased, sold, or recommended for advisory clients. Actual holdings will vary for each client. Reference to Equifax is provided for illustrative purposes only and is mentioned because they are widely known for their recent data breach in 2017.
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