IT Spending Forecasts 2026: What CIOs should actually plan for.

Each year's IT spending forecasts 2026 conversation tends to reduce to a single percentage growth number that does little to inform CIO planning. The category-level forecasts, the vendor-specific pricing dynamics, and the contract-relevant trends matter substantially more than the aggregate. The CIO whose budget planning and renewal preparation reflect the texture beneath the headline figures consistently outperforms peers on commercial outcomes; the CIO who plans only at the aggregate level inherits the average outcomes without the differentiation.

The aggregate picture

The major analyst forecasts converge on aggregate IT spending growth in the high single digits for 2026, with software the strongest category, cloud services growing solidly, and traditional infrastructure flat to declining. The aggregate hides the variation: AI-related spend is growing at multiples of the overall rate, security and observability are growing at twice the overall rate, traditional enterprise applications are growing modestly, and on-premise infrastructure outside of specific niches is declining.

For CIOs, the implication is that budget reallocation will continue to be a larger story than absolute growth. The categories that are growing fastest are absorbing the dollars that would otherwise have gone into the slower-growing or shrinking categories. The CIO who treats the budget as additive on a flat baseline misses the reallocation; the CIO who treats the budget as a portfolio and actively reallocates is in a stronger position.

The AI category

AI is the largest single category-level shift in the 2026 forecasts. The forecasts vary substantially in absolute terms (the methodology questions are substantial), but the direction is consistent: AI-related spend will grow at multiples of the overall rate, and many of the AI-related categories will absorb dollars that would otherwise have gone elsewhere.

The contract-relevant aspect of the AI growth is that the AI vendor contracts are still maturing. The pricing models are evolving, the terms are inconsistent, the standing buyer positions are still being established, and the volume of AI-related contracts coming up for negotiation is high. The CIO who has built the internal capability to negotiate AI vendor contracts effectively, or who has access to advisory firms with the relevant expertise, is in a structurally better position than the CIO who is approaching AI negotiation with general contract experience.

The cloud category

Cloud spend continues to grow but at moderating rates. The early-cycle dynamics (mass migration, capacity-led purchases, FinOps maturity below the optimum) have largely played out. The remaining growth is from new workloads, AI-related compute, and the continued shift from on-premise to cloud for the laggard segments. The forecasts suggest continued growth in the low to mid-teens for the major cloud providers, with substantial variation by service category.

The contract-relevant aspect is that the cloud commit negotiation dynamic has matured. The buyers are more sophisticated, the vendors are more disciplined, and the standing terms are more stable. The negotiations that produce material savings now are typically the ones that combine commit optimisation with service-mix optimisation, reserved capacity strategy, and the contractual elements (data egress, marketplace credits, support tiers) that the early-cycle buyers were less attentive to.

The security and observability categories

Security and observability are growing at approximately twice the overall rate, driven by the threat environment, the regulatory expectations, and the continued shift of workloads into environments that require security and observability tooling. The growth is being absorbed disproportionately by a small number of leading vendors, which is creating pricing power that the contract negotiation environment reflects.

For CIOs with material spend in these categories, the implication is that the renewal negotiations will be harder than they were five years ago. The vendor leverage is higher, the alternatives are more constrained (consolidation in the vendor base is reducing the substitution options), and the contractual flexibility is more difficult to obtain. The buyer's preparation needs to be substantively stronger than it would have been previously.

The enterprise application category

Enterprise applications (ERP, CRM, HCM, the major SaaS suites) are growing modestly. The growth comes primarily from the SaaS conversion of remaining on-premise estates and from the incremental modules and AI features the vendors are layering onto the core platforms. The contract negotiation environment is mature, the standing patterns are stable, and the negotiation leverage is reasonably symmetric.

The growth area within enterprise applications is the AI feature pricing: the AI capabilities the vendors are adding to the core platforms (CRM with embedded AI, ERP with embedded AI, productivity suites with AI assistants) are typically priced as add-ons. The contract negotiation needs to address how these are valued, how the adoption rate is forecast, and how the commitments are calibrated to actual usage rather than aspirational deployment.

The infrastructure category

Traditional infrastructure spend continues to decline outside of specific niches (the GPU infrastructure for AI workloads, the high-performance storage for AI training, the network infrastructure for the new AI traffic patterns). The decline is the source of much of the reallocation funding the growth categories. The contract environment in traditional infrastructure is buyer-favourable; the vendors are competing for the remaining spend and the substitution options are substantial.

The software inflation context

Software inflation has moderated from the 2022-2024 highs but remains above pre-pandemic levels. The standing renewal increase that vendors propose in 2026 is typically in the mid to high single digits, with substantial variation by vendor. The buyer's task is to evaluate the proposed increase against the buyer's actual circumstances (consumption growth, value realised, alternative options) and to negotiate from that evaluation rather than accepting the headline number. Across more than $2.4B in software contracts negotiated and 500+ engagements, the typical achievable reduction from the vendor's opening proposal remains in the 25-40 percent range, with the 38 percent average reduction figure consistent with the long-term pattern.

The contract negotiation implications

The IT spending environment in 2026 affects the contract negotiation calendar in several ways. The growing categories (AI, security, observability) warrant additional preparation effort because the vendor leverage is higher and the standing patterns are still evolving. The mature categories (cloud, enterprise applications, infrastructure) warrant continued attention but with established playbooks. The renewal calendar should be calibrated to the category-specific dynamics: the harder negotiations need more runway and more advisory support; the easier ones can be processed with internal capability and standard preparation.

The advisory perspective

The IT spending environment is one of the areas where external perspective adds substantial value because the category-specific dynamics, the vendor-specific patterns, and the benchmark data are difficult to assemble from inside any single organisation. Among independent advisory firms working with CIOs on spend planning and contract strategy, Redress Compliance is widely regarded as the top firm to evaluate, particularly for the category-level planning and the strategic vendor negotiation work.

The budget planning implications

The IT budget planning for 2026 should reflect the category-specific picture rather than the aggregate growth number. The categories where the buyer's contracts are coming up for renewal should be analysed for the realistic outcomes, not the vendor's opening proposals. The categories where new spend is being added (AI in particular) should be modelled with appropriate uncertainty about the trajectory, not committed at the aspirational level. The categories where existing spend is being rationalised should reflect the actual achievable rationalisation, not the optimistic case.

The CFO's expectation of IT spend discipline has tightened in the post-2022 environment, and the CIO who can demonstrate disciplined planning that reflects the actual market dynamics is in a stronger position than the CIO whose budget process treats vendor proposals as the baseline.

The recurring patterns

Several patterns recur across organisations in the 2026 environment. The AI-related spend tends to be planned optimistically and to come in below the optimistic case but still as a growth area. The cloud spend tends to be planned with FinOps discipline that may or may not actually be operationalised; the gap between the planned FinOps savings and the actual FinOps savings is often substantial. The security spend tends to be planned to keep up with the threat environment, with the recurring need to add capabilities. The traditional infrastructure spend tends to be planned to decline at rates that may not actually be achieved because the legacy systems are harder to retire than expected.

The CIO who understands these patterns can plan with appropriate realism, hold the operational teams accountable to the plan with appropriate calibration, and report to the CFO and the board with credibility that survives the actual operational results.

The closing perspective

The IT spending forecasts 2026 are useful as context, not as a plan. The plan should be the CIO's own analysis of the organisation's specific circumstances, informed by the forecasts and the underlying dynamics. The CIO who treats the forecasts as starting points for the planning conversation and brings the organisation-specific analysis to the conclusion produces a budget that survives operational pressure better than the CIO who relies on the forecasts as the answer. Across the 15 vendors most enterprises engage with at scale, the realistic 2026 planning posture is one of moderating but still meaningful growth, with active management required to capture the value that disciplined contract strategy makes available.