In stark contrast to last year’s cost-cutting mode during the thick of the pandemic, functional leaders in six areas expect to increase investment in 2022 to support their organizations’ engines of growth — talent, finance, strategy, innovation and digital capabilities.
>>: Succinct and timely executive sentiment on cross-cutting critical issues using our survey data, quick webinar polling and conversations with enterprise leaders.
More detailed role-specific reports may be available elsewhere on the site, depending on your subscription.
This budgeting season is different from the last. In 2020, 71% of executives reported pandemic-fueled spending cuts. Now, leaders tell us they expect to increase investment and support their organizations’ engines of growth: talent, finance, strategy and innovation, and digital capabilities.
For executives who are still in the throes of their budgeting process, these preliminary findings from six of our functional surveys can serve as a sanity check.
More than three-quarters of HR leaders report that their organization’s total workforce size will increase next year(see Figure 1).
In 2022, 23% of HR leaders expect to increase enterprise bonus payout budgets and 29% plan to increase their merit budgets for the general workforce. Only 6% say they will decrease budgets in both categories.
Companies plan to hire more contingent workers, too:
As for their own function, 64% of HR leaders expect a bigger budget in 2022 (see Figure 2).
The budget projections for finance are even more optimistic. More than eight in 10 (83%) finance executives report that their functional budget will increase next year. Over a quarter (27%) expect it to grow by 10% or greater (see Figure 3). On average, finance budgets are expected to go up by 5.3%.
Compared to other spend categories, more finance executives report an increase in talent budgets (see Figure 4).
Eighty-four percent say they will have more money to spend on in-house staff salaries, bonuses and benefits.
Sixty-five percent will have more for training and development.
More than half (52%) of them anticipate double-digit growth in travel and expense budgets.
Understanding what’s next for the business model and customers is critical to post-pandemic expansion. Functions such as strategy and R&D are getting more money to fund their big bets.
Among the heads of strategy we’ve polled:
Fifty-five percent expect a budget increase from 2021 to 2022, compared to just 13% a year prior.
One-third (34%) expect a budget increase of more than 10%.
Four in 10 say their budget will not change from last year (see Figure 5).
More than half (56%) of R&D leaders also expect an increase in budget (see Figure 6).
An even higher percentage, 63%, expect to expand their team.
Only 5% of respondents will cut staff.
Overall, 61% percent of technology leaders expect a larger IT budget for their enterprise in 2022 (see Figure 7). That’s a turnaround story; in the crisis year of 2020, roughly the same percentage of IT executives (60%) reported cutting spending. Still, the average increase for next year — 3.6% — is lower than the average revenue increase of 4.9% that they expect.
Most CIOs expect to increase investment in cyber/information security (66%) and business intelligence/data analytics (51%) (see Figure 8).
One-third of respondents (33%) report that their organization will not decrease spending in any technology category.
The technologies that these leaders cite most often as candidates for less investment are modernizing legacy applications (22%) and legacy infrastructure and data center technologies (42%).
Technology is a focus for customer service leaders, too. It is the only one of five spend categories where three quarters of them expect to get a budget increase (see Figure 9).
Compiled by Steve Shapiro and Dian Zhang
Contact with any questions or comments.
Contributions from the following Gartner teams:
Human Resources Research Team
Finance Research Team
CIO Research Team
Corporate Strategy Research Team
Research and Development Research Team
Customer Service and Support Research Team
PRM Research Team
Recommended by the Authors