Tech inflation data drops – what does it mean for IT budgets? – TechTarget
The U. S. government’s latest inflation data showed declines across servers, storage and professional services, a pattern that could make CIOs feel a bit better about IT investments in 2023.
The server category saw the biggest drop in the October producer price index (PPI), which the Bureau of Labor Statistics released today. Servers saw a 1 . 6% month-over-month decrease. Storage prices continued to drop since hitting a three-year peak in May. And professional services costs, which showed a slight month-over-month decline, have been leveling off given that May.
The PPI, overall, increased 0. 2% in October, less than expected, and the services component of the index decreased. 1%. Services prices had been increasing for over a year.
A sign associated with improvement?
If the pricing trend holds, it could reassure technology managers looking for signs regarding economic improvement, noted John-David Lovelock, vice president analyst at Gartner. “CIOs are hesitating plus waiting for certain conditions in order to clear before they start any new, big initiatives, ” he said, adding that the uncertainty took hold during the summer.
In addition , Lovelock said the PAYMENT PROTECTION INSURANCE numbers are in line with the economic expectations Gartner built into its latest IT spending forecast , which calls for 5. 1% growth worldwide in 2023.
Natalie Kaminski, co-founder in addition to CEO at JetRockets, a software development agency based within New York City, stated inflation has been one of many macroeconomic factors affecting C-level technology managers. The company last month surveyed more than 450 U. S. CIOs and even CTOs: 45% of the particular respondents reported their organizations are cutting 2023 budgets and 31% believed the cutback would occur.
“If these inflationary trends are slowing down, it will definitely help, ” Kaminski said. “But I don’t think it will provide the relief CIOs hope for, considering how much their role has changed together with how a lot they’re now expected to be able to take on. ”
The JetRockets survey noted 39% involving the CIOs and CTOs polled are either experiencing burnout or worried they lack typically the resources and additionally support to do their jobs.
Professional services boost for CIOs
Kaminski, however , cited this drop within the PPI for professional solutions as a new positive sign.
“This will hopefully free up more budget for CIOs to outsource software development amidst this global skills shortage, ” she mentioned.
Lovelock said the professional services pricing trend could help CIOs ask their contractors for more pricing assurance going forward. Wage development has fueled increasing expert services rates . But the recent economic data suggests that while wages aren’t plummeting, they aren’t going up much either, Lovelock said.