You face a paradox: IT budgets are climbing, yet innovation remains constrained. Global spending is rising faster than ever, but much of it is consumed by maintenance and inflationary pressures. To lead effectively, you must understand how to rebalance resources toward growth and transformation.

Strategic Takeaways

1. Global IT spending is projected to reach $5.61 trillion in 2025, a 9.8% increase from 2024, yet much of this growth will be absorbed by inflationary pressures rather than new investments.
2. Most enterprises allocate between 70% and 90% of IT budgets to “keep-the-lights-on” activities, leaving only 10%–30% for innovation.
3. Budget inertia locks organizations into repetitive funding cycles, making it difficult to redirect capital toward transformative initiatives.
4. Risk aversion slows modernization, as leaders hesitate to migrate systems despite long-term efficiency gains.
5. Fragmented collaboration between IT and business units prevents alignment of technology spending with enterprise strategy.
6. Executives who reframe IT budgets as investment portfolios—balancing resilience with innovation—position their organizations for measurable growth.

Rising Budgets, Stalled Innovation

Global IT spending is forecast to hit $5.61 trillion in 2025, marking a 9.8% increase from the prior year. Yet CIOs and CFOs acknowledge that much of this growth is being consumed by inflationary pressures and recurrent costs, leaving little room for new initiatives. This creates a paradox: enterprises are spending more, but achieving less transformation.

For senior leaders, the tension lies in balancing operational resilience with innovation. You must keep systems stable, but allocating 70%–90% of budgets to maintenance constrains your ability to invest in emerging technologies, new business models, and competitive differentiation. This tradeoff is not abstract—it plays out daily in boardrooms where executives debate whether to fund modernization or defer it in favor of short-term stability.

The challenge is compounded by organizational inertia, risk aversion, and siloed decision-making. Without deliberate intervention, IT budgets risk becoming a drag on enterprise growth rather than a catalyst for it.

Here are the practices and insights that can help you break the cycle.

1: Rethinking IT Budgets as Investment Portfolios

Treating IT budgets as static cost centers is no longer viable. Instead, view them as investment portfolios that balance resilience, efficiency, and innovation. This framing allows you to allocate resources with the same discipline used in financial markets—diversifying risk while targeting growth.

Portfolio allocation models can help shift 10–20% of spend toward transformative initiatives without destabilizing core operations. Gartner’s analysis shows that inflation is absorbing much of the nominal growth in IT budgets, meaning leaders must be intentional about carving out funds for innovation. By reframing budgets as portfolios, you create a structure that forces prioritization and accountability.

Consider a global manufacturer integrating workloads across multiple cloud service providers. By treating IT spend as an investment portfolio, the company can allocate a portion of funds to modernization projects while maintaining operational resilience. This approach ensures that innovation is not sidelined but embedded into the financial architecture of the enterprise.

2: Confronting Budget Inertia

Budget inertia is one of the most persistent barriers to innovation. Many IT leaders receive the same funding year after year, with allocations tied to historical precedent rather than future priorities. This repetitive cycle perpetuates inefficiency and prevents organizations from redirecting capital toward transformative initiatives.

Zero-based budgeting offers a way to reset priorities. Instead of assuming last year’s allocations will continue, each budget cycle begins from zero, requiring justification for every expense. Deloitte’s research highlights how enterprises that adopt zero-based budgeting can shift from cost containment to value creation.

For executives, the challenge is cultural as much as financial. Budget inertia reflects organizational habits and risk aversion. Breaking the cycle requires strong governance, transparent metrics, and a willingness to challenge entrenched assumptions. By confronting inertia, you open the door to funding innovation without compromising stability.

3: Overcoming Risk Aversion in System Migration

Risk aversion is another factor that slows modernization. Migrating to new systems requires investment, and many companies avoid migration due to potential risks. Yet the hidden costs of deferring modernization are often greater than the risks of change. Legacy systems consume disproportionate resources, limit agility, and expose enterprises to security vulnerabilities.

Framing migration as a risk-managed investment rather than a disruption can shift the conversation. Leaders can use phased approaches, pilot programs, and hybrid models to reduce uncertainty. Kaseya’s 2025 report notes that enterprises delaying modernization often face escalating costs and missed opportunities.

Take the case of a global financial services firm operating on outdated core banking systems. By deferring migration, the firm faces rising maintenance costs and regulatory risks. A phased modernization strategy, supported by strong governance, allows the firm to mitigate risk while unlocking efficiency gains.

Risk aversion is natural, but unmanaged risk is more dangerous. By treating migration as an investment in resilience and growth, you can overcome hesitation and position your enterprise for long-term success.

4: Building Cross-Department Collaboration

One of the most overlooked barriers to innovation is the lack of alignment between IT and business leadership. Too often, technology teams operate in isolation, focusing on infrastructure and system stability, while business units prioritize market growth, customer experience, or compliance. This disconnect leads to fragmented priorities and budgets that fail to support enterprise-wide transformation.

Collaboration must move beyond periodic meetings or reporting structures. It requires governance models that integrate IT decision-making into enterprise strategy. When CIOs, CFOs, and COOs co-create budget priorities, technology spending becomes a lever for growth rather than a siloed expense. Kaseya’s 2025 report highlights that nearly 60% of IT leaders cite misalignment with business units as a primary obstacle to innovation. This statistic underscores the importance of embedding IT into the broader enterprise agenda.

Consider a multinational healthcare provider seeking to modernize patient data systems. If IT leaders pursue upgrades without input from compliance officers or clinical teams, the result may be technically sound but strategically misaligned. By contrast, when cross-department collaboration drives the budgeting process, investments reflect both operational resilience and regulatory requirements. This integrated approach ensures that IT spending supports enterprise outcomes rather than isolated objectives.

Collaboration also requires shared accountability. Executives must establish joint metrics that measure both operational performance and innovation outcomes. For example, tracking how IT investments reduce patient wait times or improve supply chain efficiency creates a direct link between technology and business value. Without these shared measures, collaboration risks becoming symbolic rather than substantive.

The path forward is to institutionalize collaboration as a structural discipline. This means embedding IT leaders into enterprise planning cycles, aligning budget reviews with strategic objectives, and creating governance forums where technology and business leaders jointly evaluate tradeoffs. By doing so, you transform IT spending from a cost center into a driver of enterprise-wide innovation.

5: Unlocking Innovation Capacity

Innovation capacity is not a function of budget size alone—it is a function of how resources are allocated. Enterprises that dedicate even 10% of maintenance spend to innovation can unlock significant opportunities in automation, artificial intelligence, and cloud modernization. The challenge lies in rebalancing budgets without compromising operational stability.

Benchmarks from KPI Depot show that organizations allocating more than 20% of IT budgets to innovation achieve higher ROI on digital transformation initiatives. Yet most enterprises remain trapped in a cycle where 70%–90% of spending is consumed by maintenance. This imbalance constrains the ability to experiment, scale new technologies, or respond to market shifts.

Unlocking innovation capacity requires a disciplined approach. First, identify areas where maintenance costs can be reduced through automation or outsourcing. Second, redirect those savings into innovation projects with measurable outcomes. Third, establish governance mechanisms that ensure innovation spending is tracked and evaluated against enterprise objectives.

Take the case of a global logistics company facing rising costs in legacy warehouse management systems. By automating routine processes and outsourcing non-core IT functions, the company freed up 15% of its budget. Those funds were redirected into AI-driven demand forecasting, which improved efficiency and reduced inventory costs. This reallocation demonstrates how even modest shifts in budget can create outsized impact.

Innovation capacity also depends on leadership mindset. Executives must view innovation not as discretionary spending but as essential investment. This requires reframing IT budgets as enablers of growth rather than constraints. By embedding innovation into the financial architecture of the enterprise, you create a sustainable mechanism for transformation.

Looking Ahead

IT budgets will continue to rise, but without structural change, much of that growth will be consumed by maintenance and inflation. Enterprises that fail to rebalance risk falling behind competitors who use disciplined budgeting to fuel innovation. The future challenge is not simply managing costs—it is ensuring that every dollar spent contributes to resilience, efficiency, and growth.

Leaders who treat IT spending as an investment portfolio, confront budget inertia, overcome risk aversion, and institutionalize collaboration will unlock capacity for innovation. The opportunity is significant: by shifting even a fraction of spend toward transformative initiatives, you can create measurable enterprise value, strengthen resilience, and position your organization for long-term success.

The next phase of enterprise transformation will be defined not by how much you spend, but by how effectively you allocate. Those who master the balance between maintenance and innovation will lead industries through complexity and change, turning IT budgets into engines of growth rather than barriers to progress.