Most executives apparently think their companies are spending too much on technology. But are they really?
Among 310 procurement, IT and finance executives at U.S. companies with at least $100 million in annual revenue, surveyed by consulting firm West Monroe, almost two-thirds (63%) said they believe they spend more on IT than their industry peers do.
On the other end of the scale, a minuscule cohort, just 3%, thought they spend less than peers, portraying a clear gap between perceptions and reality.
According to West Monroe, the majority’s mindset is a risky one. “When organizations think they’re overspending relative to competitors, they become defensive rather than strategic and cost-cutting becomes the primary priority,” the firm wrote in its survey report.
Executives may assume their IT spending is at a comparatively high level because it’s rising significantly from year to year.
Among survey participants, most (86%) said their companies increased tech spending in the past 12 months, and 85% expect to hike it again in the next 12 months. Even more (93%) said their enterprise software costs are rising, with 46% putting the increase at more than 10%.
The report also cited Gartner research showing that average IT spending rose 7.4% in 2024 and 7.9% in 2025. Again, here, software spending rose even more (10.5% this year).
For many companies, AI is now a line item in their IT budgets. Nearly a quarter (23%) of West Monroe survey participants are allocating at least 10% of their total IT spending to AI initiatives, which the report called “a fundamental shift.”
In fact, 42% of the executives said their companies plan to scale their AI and data capabilities in the coming year, making it their top technology priority.
The report noted that AI influences not only software spend, but other IT costs as well. For example, 73% of survey participants said AI investments will lead to increased third-party/contractor spend, and 84% said so about IT infrastructure.
Meanwhile, AI is not resulting in lower labor costs, as many had predicted, according to survey results. Almost two-thirds (64%) of the executives said AI is actually increasing their internal headcount, while only 8% said it’s causing a decrease.
West Monroe recommended that executives be more rigorous with IT portfolio management, ROI validation and runaway projects.
“There is a risk of software proliferation with the explosion of AI tools in the market,” said Dhaval Moogimane, senior partner of high tech and software for West Monroe. “This will only fuel the growth of software spend, unless leaders adopt a more rigorous approach to managing the portfolio.”
