IT leaders reshape 2025 spending around AI despite cost concerns

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IT leaders reshape 2025 spending around AI despite cost concerns

The new Flexera survey also found that OpenAI joined Microsoft, Google and AWS as a top priority software vendor for the first time this year.

Published on 19th November 2024

Enterprise IT leaders are reshaping investment priorities around AI despite the technology’s hefty price tag, according to a new Flexera report. The IT asset management and FinOps solution provider surveyed 800 IT executives about their 2025 priorities.
While 71% of respondents acknowledged cloud spend weighs heavily on their IT budget, nearly half said AI implementation was their primary focus next year, an 11 percentage point jump from 2024. Reducing IT costs and managing security risks were the next two priorities, cited by 27% and 25% of respondents, respectively.
“Artificial intelligence seems to pose the biggest potential gains in the short- and long-term,” Conal Gallagher, CIO at Flexera, said. “There’s an extraordinary expense required of AI projects, creating an even greater sense of urgency to not only understand the impact of the investment but to quickly demonstrate returns that advance core business objectives.”

The race to keep pace with advances in AI ran headlong into the perennial push to keep IT spending in check. As C-suites eyed the technology’s business potential, enterprise cloud bills spiked by as much as 30% year over year, according to a Vanson Bourne report commissioned by Tangoe.

While returns on generative AI investments have yet to materialize and analysts expect nearly one-third of projects to be abandoned after the pilot phase by next year, enterprises remain undeterred.

Vendors are bullish, too. Software companies have been loading up their products with generative AI-powered features, including natural-language chatbots, coding assistants and autonomous agents. The top three cloud providers — AWS, Microsoft and Google Cloud — are already enjoying the spoils of a spending boom, as enterprises turn to hyperscaler platforms to modernize their data and onboard AI capabilities.

The trend is reflected in a shift among the leading business solution providers.

Microsoft, an enterprise software powerhouse and early purveyor of generative AI tools, remained the top vendor, cited by nearly two-thirds of Flexera respondents as the provider that consumes the largest segment of their IT budget. However, Google rose to second, at nearly 50%, followed by AWS and, for the first time in Flexera’s annual report, ChatGPT creator OpenAI, at 38% and 37% respectively.

By contrast, Microsoft was followed by AWS, Oracle, SAP and Salesforce in the top five technology vendors in a similar survey Flexera conducted in October 2023.

“Although many of the Big Five tech companies have been investing in AI, Microsoft has been especially aggressive,” Flexera said in the report. “Their partnerships, such as with OpenAI, and integrations across products like Copilot have helped to solidify their position at the forefront of the AI game.”

The three hyperscalers poured tens of billions of dollars into AI infrastructure to satisfy surges in compute consumption throughout the year. That pattern is expected to continue into 2025, with AWS, Microsoft and Google Cloud planning to increase capital expenditures of data center buildouts.