6 min read

By 2026, companies worldwide will spend $6.15 trillion on IT. That sounds like an unprecedented investment surge. The reality behind it, however, is less impressive: In most organizations, over 70 percent of this budget goes toward ongoing operations-maintenance, license renewals, patching, and legacy system upkeep. What remains for innovation, automation, and strategic investments amounts to only a fraction of the total sum. The IT budget is growing. The room for maneuver isn’t.

The 6.150 Trillion Illusion

The number sounds promising. Gartner forecasts global IT spending to reach $6.150 trillion in 2026, a 10.8 percent increase from the previous year. Data centers are seeing the strongest growth at 31.7 percent, software spending rises by 14.7 percent, and cloud services are approaching the $877 billion mark. At first glance, this looks like an industry investing heavily in the future.

On closer inspection, however, a different picture emerges. A significant portion of this growth is spent merely on maintaining the status quo. According to Gartner analysts, CIOs spend around 9 percent of their budgets solely on absorbing price increases for existing software. This means that of a 10.8 percent budget increase, nearly 9 percentage points are already reserved for inflation. The actual increase in strategic flexibility is minimal.

Moreover, the majority of increased spending goes toward infrastructure and platforms designed to run existing workloads more efficiently – not toward new business models or strategic differentiation. More money spent on cloud services does not automatically mean more innovation. Often, it means migrating existing systems into a more expensive environment.

The breakdown by category makes this clear. Enterprise IT spending across all industries is set to rise to $4.700 trillion, according to Gartner – a 9.3 percent increase. Of that, data centers alone account for $650 billion, driven primarily by the expansion of compute capacity due to AI. Cloud services reach $877 billion. Device spending stands at $836 billion. In none of these categories does growth indicate strategic innovation. Instead, it reflects rising infrastructure costs in an increasingly data-intensive world.

Run vs. Change: The Structural Question Behind the Budget Debate

The distinction between “run the business” and “change the business” has been a cornerstone of IT budgeting for decades. “Run” encompasses everything required to maintain ongoing operations: licenses, maintenance, support, infrastructure, and patches. “Change” includes all initiatives that alter the status quo: new systems, process automation, digital products, and strategic projects.

McKinsey sets the benchmark for successful digital transformers at allocating at least one-third of their budget to change activities. Organizations that meet or exceed this threshold actively modernize their technology landscapes, integrate new technologies faster, and respond more flexibly to market shifts.

Reality often looks different. In regulated industries and legacy-heavy organizations, the “run” share exceeds 70 percent, according to McKinsey. In the German mid-market (Mittelstand), companies report that 70 percent of their IT budgets go toward maintaining existing operations-leaving only 30 percent for innovation of any kind. In the public sector, the figure for operations and maintenance can reach as high as 80 percent.

This is no marginal issue. It represents the central strategic challenge in IT budgeting: not how much a company spends on IT, but how that spending is balanced between maintaining existing systems and driving transformation.

The implications are significant. A company with an IT budget of 50 million Euro and a 75 percent “run” share has just 12.5 million Euro available for change initiatives. A substantial portion of that amount is typically consumed by addressing technical debt. What remains for genuine innovation often covers only two or three mid-sized projects per year. In a world where new strategic demands emerge every quarter, this level of investment is insufficient to maintain competitiveness.

Why technical debt eats up strategic flexibility

Technical debt is the silent budget killer. McKinsey estimates that addressing technical debt consumes 20 to 40 percent of IT budgets-particularly in companies that have not modernized their core systems. This is not a one-time cost, but an annual expense that grows with every deferred modernization effort.

The mechanism is well known: Companies that postponed architectural decisions in 2022 and 2023 to deliver faster are now paying 40 percent more for routine maintenance than competitors who invested early in quality. Technical debt accrues interest-and that interest rises exponentially.

The table highlights the dilemma: The actual innovation share-defined as change spending minus technical debt costs-stands at just 10 to 15 percent of the total IT budget for many organizations. In legacy-heavy environments, it sometimes falls below 10 percent. This means that from an IT budget of 100 million Euro, fewer than 10 million Euro are often available in practice for genuine strategic investments.

Particularly problematic: Technical debt is rarely reported as a separate line item. It hides within increased maintenance costs, longer development cycles, workarounds that tie up personnel, and security vulnerabilities requiring costly patches. Many organizations don’t know their true technical debt burden-because it has never been measured.

A concrete example illustrates this dynamic: A mid-sized company operates an ERP system whose version has not been supported by the vendor since 2019. The annual effort required for custom patches, compatibility workarounds, and security hotfixes already exceeds the cost of migrating to the current version. Still, the migration is postponed year after year because the change budget is already allocated to other projects. Technical debt rises, the run share grows, and the room for change shrinks further. It’s a downward spiral that can only be broken through deliberate prioritization.

The AI Effect: More Budget, Same Structure

Generative AI is significantly reshaping IT budgets. According to Gartner, spending on GenAI models will grow by 80.8 percent in 2026. Eighty-eight percent of executives plan budget increases specifically for AI projects. That sounds like a breakthrough for the change portion of IT spending.

The reality is more nuanced. In a recent study, McKinsey analyzed how AI investments are altering budget structures-and arrived at a sobering conclusion: most organizations are already operating at the limit of their change capacity. New AI investments often displace other value-generating initiatives, rather than increasing the overall share of change spending.

This means AI budgets are growing-but typically at the expense of other innovation projects, not at the expense of run spending. ERP system modernization gets delayed because funds are redirected to an AI pilot. Cloud migration timelines are extended because GenAI infrastructure takes priority. Meanwhile, the run budget remains flat or even increases, as AI systems generate their own operational costs.

BCG describes this shift in an analysis as “AI-driven budget rebalancing”: companies are investing in AI, but not additionally-rather by reallocating funds within the existing change budget. The result is a zero-sum game for the total share of strategic investments.

There is one exception: organizations that deliberately use AI to reduce their run costs. Automated incident management, AI-supported capacity planning, intelligent patching, and predictive maintenance can measurably lower operational workloads. In these cases, the AI investment pays for itself by converting run budget into change budget. But this approach requires a strategic decision to view AI not only as an innovation driver but also as an efficiency lever for maintaining and optimizing existing operations.

Three Levers to Shift the Run-Change Ratio

Companies that sustainably lift their change share above the 33 percent threshold focus on three key areas.

First: Negotiate and consolidate licensing costs. Spending 9 percent of the IT budget on price hikes for existing software is not inevitable. Companies that systematically audit their license agreements, identify shelfware, and professionalize negotiation cycles can cut this share in half. This may sound like an operational issue-but it’s the most effective lever for freeing up change budget. Every Euro saved on licensing is a Euro available for strategic investment.

Second: Make technical debt visible and reduce it systematically. What isn’t measured can’t be managed. Organizations that track their technical debt and treat it as a dedicated budget line make better prioritization decisions. Reducing technical debt lowers run costs sustainably-each modernization effort reduces future maintenance effort. This isn’t a short-term saving, but a structural shift that compounds with every quarter.

Third: Use AI for run activities, not just for change initiatives. This is the underestimated lever. If AI investments flow exclusively into new projects, the run-change ratio doesn’t shift. But when AI reduces operational costs-through automated incident management, intelligent patching, or AI-driven capacity planning-the run share declines structurally. Every percentage point reduction in run costs through automation translates into an additional point available for strategic innovation.

The bottom line: An IT budget where 75 percent flows into operations isn’t necessarily a sign of low ambition. It’s a symptom of unresolved structural issues. The solution isn’t simply more budget, but a different budget architecture. Companies that recognize this and systematically improve their run-change ratio will have significantly more strategic flexibility in three years than those relying solely on budget increases.

Frequently Asked Questions

Header image source: Pexels / olia danilevich (px:5466815)