Where are budgets being allocated in 2025

Where CIOs Are Allocating Budgets in 2025

As we move deeper into 2025, chief information officers and technology leaders are making strategic decisions about where to allocate their growing IT budgets. With worldwide IT spending projected to reach $5.61 trillion this year—a significant 9.8% increase from 2024—organisations are balancing innovation with rising costs while addressing evolving business needs. Many CIOs are prioritising investments in cybersecurity to protect their organisations from increasing cyber threats and data breaches. Additionally, a significant portion of the budget is being allocated towards digital transformation initiatives, such as cloud computing, AI, and automation, to drive efficiency and competitiveness. With the rapid pace of technological advancements, CIOs are also focusing on investing in talent development and training to ensure their teams have the skills needed to leverage new technologies effectively.

Key Investment Areas for Technology Leaders in 2025
Cybersecurity Takes Centre Stage
Cybersecurity remains the undisputed top priority for CIOs in 2025, with research showing it outpaces all other categories of initiative. This focus is driven by several factors:

• Rising costs of cybersecurity insurance
• Increasing sophistication of AI-powered cyberattacks
• Software supply chain vulnerabilities
• Hybrid work environments creating new security challenges

Organisations are implementing Zero Trust Network Access (ZTNA) as their most significant cloud security investment, with multifactor authentication leading identity-related security spending. According to recent surveys, 88% of CIOs in regions like Australia and New Zealand have prioritised cybersecurity investments, reflecting its critical importance across all industries.

With the average cost of a data breach now exceeding $4.45 million, companies are investing not just in security technologies but also in building resilient systems capable of defending against increasingly sophisticated threats.

Cloud and Infrastructure Modernisation

The cloud journey continues to accelerate in 2025, with organisations investing heavily in cloud platforms and infrastructure modernisation:
• 83% of ANZ CIOs are emphasising cloud platform investments.
• US enterprises are allocating 1.45% of annual revenue to technology compared to 1.29% in Europe.
• Data centre systems spending is projected to grow by 23.2% globally.

This investment reflects the ongoing shift from legacy systems to more agile, scalable cloud environments. CIOs are focusing on creating what Accenture calls a “cloud-powered digital core” to enable enterprise efficiency and agility. Research indicates that organisations with strong digital core investments are achieving up to 60% higher revenue growth rates and 40% greater profits. This trend towards cloud platform investments is driven by the need for businesses to adapt to rapidly changing market conditions and customer demands. By investing in cloud technologies, companies can streamline operations, improve collaboration, and enhance overall business performance. As the digital landscape continues to evolve, CIOs must prioritise cloud-powered digital cores to stay competitive and drive growth in today's dynamic business environment.

Data Analytics and AI Integration

The AI revolution is in full swing for 2025, with generative AI moving from experimentation to implementation:
• 53% of organisations are planning GenAI investments in 2025, up from 46% in 2024.
• Data analytics remains a core focus area for 84% of ANZ CIOs.
• AI and machine learning rank as the second most important IT initiative at 16%.

CIOs are now focused on shifting from AI experimentation to implementing technologies that provide tangible, measurable outcomes. This includes aligning AI investments with strategic goals to drive commercial value beyond simple automation. The rise of agentic AI—capable of autonomously performing complex tasks across business operations—is enabling organisations to boost efficiency and improve decision-making. As a result, CIOs are increasingly looking to leverage agentic AI to streamline processes, enhance customer experiences, and gain competitive advantages in their respective industries. This shift towards more advanced AI technologies underscores the growing importance of harnessing data and analytics to drive business success. With the continued evolution of AI and machine learning capabilities, organisations are poised to achieve greater efficiencies and innovation in the years to come.

Digital Transformation and Customer Experience

Customer experience (CX) investments continue to grow, with 78% of business leaders increasing their CX spending, according to recent research. This focus reflects evolving customer expectations and the competitive advantage that superior digital experiences provide:

• AI-driven customer engagement through hyper-personalisation
• Data analytics to improve customer journeys
• Automation to streamline service delivery
• Enhanced mobile and omnichannel experiences

Digital transformation remains crucial for modernisation and competitive advantage, with organisations investing in technologies that enable business model innovation and operational efficiency. These investments in digital technologies are aimed at creating seamless and convenient customer experiences across all touchpoints. By leveraging AI, data analytics, and automation, businesses can better understand their customers' needs and preferences, leading to more personalised interactions and improved customer satisfaction. The shift towards enhanced mobile and omnichannel experiences reflects the growing importance of meeting customers wherever they are, on any device or platform, in order to stay ahead in today's competitive landscape.

Sustainability and Green Technology
Sustainability has emerged as a significant focus area for CIOs in 2025:

• 62% of business leaders plan to boost sustainability investments.
• Energy efficiency technology is gaining traction.
• AI’s environmental impact is being carefully considered.

CIOs are implementing technologies to reduce power consumption, cut carbon emissions, and save costs. This includes adopting circular business models and implementing advanced manufacturing processes to drive down energy demand. As regulatory requirements tighten, organisations are investing in data-driven approaches to sustainability reporting and compliance. By leveraging data analytics and AI, CIOs are able to track and analyse their environmental impact in real-time, allowing for more proactive decision-making. These investments in sustainability not only benefit the environment but also improve the bottom line by reducing operational costs and increasing efficiency. As the world moves towards a more eco-conscious future, CIOs are at the forefront of driving change and ensuring that their organisations are responsible stewards of the planet.

Budget Planning Considerations for 2025
Investing in People

Finding and retaining tech talent remains a critical priority in 2025. CIOs are allocating significant portions of their budgets to:

• Competitive compensation packages to attract top talent
• Retention strategies to maintain institutional knowledge
• Developing transformation leaders who can drive change

As one expert notes, “Top CIOs never compromise in developing their digital trailblazers,” even during tighter budget periods. Creative approaches like establishing book clubs, hosting workshops, and reinforcing digital transformation leadership attributes are being used to promote lifelong learning without heavy investment. These initiatives are crucial for staying ahead in the rapidly evolving digital landscape. By investing in talent development and fostering a culture of continuous learning, organisations can ensure they have the skilled leaders needed to drive successful transformations. This proactive approach not only secures a competitive edge but also cultivates a workforce that is adaptable, innovative, and committed to driving positive change within the organisation. In the end, the investment in developing digital trailblazers pays off in improved performance, increased efficiency, and long-term success.

Learning and Development

With technology evolving rapidly, learning and development investments are crucial:

• 73% of businesses plan to increase their investment in learning technology.

• AI-driven personalised learning platforms are gaining popularity

• Organisational development is being aligned with business outcomes.

Organisations are focusing on both technical and soft skills development, with strategic planning, execution, coaching/mentoring, and learning agility identified as top priorities. These investments directly influence productivity and innovation while preparing teams for the future of work. With the increasing pace of change in the business world, companies are realising the importance of investing in their employees' learning and development. By increasing their investment in learning technology and utilising AI-driven personalised learning platforms, businesses are ensuring that their workforce is equipped with the necessary skills to succeed. By aligning organisational development with business outcomes and focusing on a combination of technical and soft skills, companies are setting themselves up for success in the rapidly evolving marketplace. These investments not only increase productivity and innovation but also help prepare teams for the future of work.

Comprehensive Technology Cost Planning
CIOs are taking a more holistic approach to technology costs in 2025:

• Accounting for implementation and integration expenses beyond initial purchase costs
• Evaluating the total cost of ownership for new systems
• Considering the balance between permanent staff and contractors/consultants
• Assessing the role of system integrators and partners

With cloud computing costs soaring and SaaS renewals climbing, CIOs are implementing FinOps strategies to optimise spending. Some organisations have reduced cloud costs by 30% through identifying idle instances, optimising storage, and negotiating better multi-cloud rates. Others are leveraging automation and AI tools to track usage and forecast spending, allowing them to make more informed decisions about resource allocation and budgeting. Additionally, CIOs are increasingly working with vendors and partners to negotiate flexible pricing models and discounts, ensuring that they are getting the best value for their technology investments. As technology costs continue to rise, it will be crucial for CIOs to stay on top of these trends and strategies to effectively manage their budgets and drive business success.

Contingency Planning

With 2025 presenting economic uncertainty, CIOs are building flexibility into their budgets:

• Developing multiple budget scenarios (Plans A, B, and C)
• Prioritising “force multiplier” investments that address several business priorities
• Creating contingency funds for unexpected needs or opportunities

As one expert advises, “CIOs must adopt a more flexible, scenario-based approach to budgeting, with contingency plans in place for economic and market shifts.” This approach allows technology leaders to quickly adjust to changing conditions while maintaining focus on strategic initiatives. By preparing for various potential outcomes, CIOs can ensure that their organisations remain agile and resilient in the face of economic volatility. This proactive approach not only mitigates risks but also positions companies to capitalise on emerging opportunities. Ultimately, by incorporating flexibility into their budgets, CIOs can navigate uncertain times with confidence and strategic foresight.

Conclusion

As we navigate through 2025, CIOs and technology leaders face the dual challenge of driving innovation while managing rising costs. By strategically investing in cybersecurity, cloud infrastructure, data and AI, customer experience, and sustainability—while carefully planning for talent development and cost contingencies—organisations can position themselves for success in an increasingly digital future.

The most successful CIOs will be those who align technology investments with business outcomes, enabling their organisations to become what industry experts call “reinvention-ready”—capable of adapting to rapid technological and market changes while maintaining competitive advantage.