How IT pros are thinking about AI and budgets amid economic uncertainty

This year, IT pros may discover what’s global is also local, as economic uncertainty and worldwide conflicts translate into pinched IT budgets and a growing need to vindicate AI investments.

There has been no shortage of global strife lately. The ongoing US-Israel war with Iran has caused oil prices to jump, with national gas prices reaching over $4 per gallon, up from $3.17 a year ago. Meanwhile, the AI boom is driving up US natural gas and electricity prices due to data centers’ increasing energy demands.

Those aren’t the only prices going up. The US Department of Labor’s March Consumer Price Index report showed prices climbed 3.3% YoY. (And if that wasn’t enough, recession pop is making a comeback.)

Where does IT fit into all of this? Some experts say IT pros may feel the aftershock of global conflicts and economic issues at their organizations, if they haven’t already. A March Forrester trends report predicted rising energy costs and inflation will likely have an impact on IT budgets, for instance.

“CIOs will once again need to double down on IT spend management through prioritization,

targeted cost cutting, tight vendor management, and other techniques,” the report wrote.

Don’t forget about IT infrastructure. Meredith Whalen, chief product, research, and delivery officer at market intelligence company IDC, said during an April 8 IDC Directions keynote address that geopolitical conflicts are “stress testing” the current digital economy. Rising oil prices will increase the cost of running data center facilities, she said, adding that CIOs will need to rethink resiliency and continuity plans for digital infrastructure as hyperscale availability zones begin to overlap with conflict areas: “They’re not nice-to-have. They’re must-haves going forward.”

Defending AI investments. Ongoing economic uncertainty may also have an impact on AI investments. Forrester analysts predicted inflationary pressure and rising energy costs will lead to more skepticism from leadership teams around AI projects and their ROI, causing security professionals to need to defend those investments more.

But, not everyone believes AI investments will take a hit. During her keynote, Whalen said the IT industry is currently in an AI “supercycle,” which she currently sees as being undisturbed by the war.

“We see AI remains critical, the capacity build up continues, and customers continue on their path of moving from experimentation and moving their projects into production,” Whalen said.

Navigating shaky waters ahead. Dan O’Connell, CEO at customer service platform company Front, advises IT executives to refrain from overreacting to global events, which can prove unpredictable.

“You have to have some reaction and be cautious, and then, at the same time, be nimble, simply because things might drastically change a week from now,” O’Connell said. He also suggested IT pros who need to tighten their budgets consider doing so by cutting expenses related to non-critical workflows.

“It really becomes ‘What are the perhaps more frivolous things or the things that are more difficult to prove ROI and value on?’” O’Connell said. “You might ask for a reduced price on the contract that you might be in and I think those are conversations that, as I said, non-critical vendors will probably start to see and feel.”