Survey Says: AI and Data Buoy Technology Spend Planning - Battery Ventures
State-of-Enterprise-Tech-Spending-Q124.pdf
Key takeaway
- For entrepreneurs: Embrace AI and data-driven technologies as they are becoming essential for business growth and efficiency, with a significant portion of enterprise budgets being allocated to these areas.
- For investors: The steady increase in technology spending, particularly in AI and data tools, signals strong investment opportunities in tech startups and companies focusing on these innovations.
Summary
Battery Ventures has released their State of Enterprise Tech Spending report for Q1CY24, intended to gauge the budget planning and overall sentiment of large enterprise technology buyers. The team polled 100 CXOs who collectively represent over $35B in annual technology spending. Past reports can be accessed here: September 2022, March 2023 and September 2023.
The findings highlights the continued growth and stability in enterprise technology spending, with a particular emphasis on AI and data-related investments. Despite economic uncertainties, enterprises are prioritizing AI and data tools, indicating improving market confidence and the continued shift towards leveraging these technologies for efficiency and performance gains.
Insights
- Tech Spending Stability: Only 22% of CXOs plan to decrease tech budgets, down from 27% last year, indicating market stability.
- Budget Trends: 55% of respondents plan to increase their tech budgets, deploying an estimated $1.5B on AI and data-related technologies over the next five years. 84% of buyers plan to increase spending on AI/ML tools.
- AI and Data Prioritization: Generative AI has become the #2 priority for enterprise tech buyers, with 30%+ of tech budgets dedicated to enterprise apps and cloud infrastructure, and 15%+ towards data warehouses and data operations.
- Generative AI Deployment: 84% of enterprise buyers expect to deploy generative AI in production within the next 12 months, slightly up from 79% only 6 months ago.
- AI Copilots: 75% of respondents are looking to implement AI-powered copilots, though only 29% of enterprises are willing to let employees implement their own.
- Startups vs. Incumbents: 45% of organizations are looking toward new vendors for co-pilot solutions versus existing vendors or building the capability internally.
- Hiring Trends: Positive hiring trends suggest future growth and investment in new projects and technologies. The number of organizations looking to slow down or enter a hiring freeze has dropped to 34% from 46% this time last year.
Implications
- For Entrepreneurs: There is a growing market for AI and data-driven solutions. Entrepreneurs should focus on developing innovative AI tools and data management solutions to meet enterprise demands.
- For Investors: The increasing allocation of budgets towards AI and data tools presents lucrative investment opportunities in tech startups and companies specializing in these areas.
- Market Stability: The stability in tech spending despite economic challenges indicates a resilient market, encouraging further investments and innovations.