IT spending jumps 15% in 2027. Start your budget with renewals

Most mid-size businesses are building their 2027 technology budget right now. Many will start from this year's number and add a few percent. That approach is likely to come up short. Prices for hardware, software and cloud services are moving faster than usual, and a growing share of your spend now depends on how much people use a tool rather than how many licenses you bought.

What the forecast says

On October 21, Gartner published its latest worldwide IT spending forecast. It projects global IT spending of $7.35 trillion in 2027, up 15% from 2026. Software spending is forecast to grow 14.6%, infrastructure as a service 25.7% and devices 8.1%. Communications services grow more slowly, at 2.9%.

The reasons matter more than the totals. Gartner says demand from data centers has more than doubled memory prices over the past 12 months, and that those cost increases are spreading through storage, servers, networking, PCs and other devices. Gartner analyst John-David Lovelock expects this "memflation" effect to persist through 2027 before hardware pricing stabilizes. He also notes that higher prices support spending growth while putting pressure on affordability.

This is research-firm forecasting at a global level, and much of the growth comes from hyperscalers building AI data centers. Your business will not see a 15% increase across the board. But the price pressure behind the forecast reaches ordinary buyers through PC refreshes, server and storage quotes, and software renewals.

Usage-based AI billing is becoming the default

The second change is quieter. Microsoft's October partner announcements state that starting December 1, 2026, usage-based billing will be enabled by default for new Microsoft 365 Copilot Business licenses purchased through its Cloud Solution Provider program. The default spending limit is 4,000 Copilot Credits per user per month, adjustable by admins. Microsoft's own example: a customer with 100 Copilot Business users could consume up to 400,000 credits a month under the default limit, with charges based on actual usage.

Microsoft is not alone in moving this direction. Many AI features across business software are priced by consumption, by conversation or by outcome. The practical effect for a budget owner is the same. Part of next year's spend will not be fixed at signing. It will depend on settings someone chooses, or leaves at the default.

Build the budget from renewals, not last year's total

The most reliable way to see 2027 coming is to list every contract that renews or ends between now and the end of next year. For each one, capture:

• The renewal or end date, and the notice period to cancel or renegotiate.
• The current price and any price-increase language in the contract.
• Whether the service is still used at the quantity you pay for.
• Who inside the business owns the decision.

Add the end-of-support dates that force spending. Microsoft notes that Office, Project and Visio LTSC 2021 reached end of support on October 13, 2026. If your business still runs perpetual Office licenses, that is a 2027 line item whether you planned for it or not.

Separate fixed costs from usage-driven costs

Once the renewals are listed, split them into two groups. Fixed costs are per-seat, per-line or per-circuit charges that change only when you change the contract. Usage-driven costs move with activity: cloud compute and storage, AI credits, contact center minutes, overage charges. The second group needs its own controls.

For every usage-driven service, ask your provider or internal team these questions. What is the default spending limit, and who can change it? What happens when the limit is reached? Who receives an alert, and at what threshold? Can we see usage by department or by user? A budget that cannot answer those questions is a guess.

Decide which hardware to buy, and when

If memory-driven price increases persist through 2027, as Gartner expects, the timing of hardware purchases matters more than usual. Review the PC, server and storage refreshes in your plan. Some may be worth pulling forward. Others may be better extended, moved to a hosted desktop or replaced by a cloud or colocation option. Get current quotes before you set the number, and ask how long each quote is valid.

Use the leverage you have before you sign

Renewals are where most of the savings and most of the surprises sit. Start conversations 90 to 120 days before notice deadlines. Compare at least one alternative, even if you expect to stay, so you know what the market will bear. Ask for price caps on multi-year terms, and get usage limits and alerting written into the order where you can. None of this guarantees a lower price. It does make sure the price you pay is a decision rather than a default.

How StrategIQ IT can help

Before founding StrategIQ IT, Brian spent much of his career as the enterprise customer accountable for technology budgets and renewals, then built a practice on the partner side around what he had wanted as a buyer. We can help you build the renewal calendar, separate fixed from usage-driven costs, and bring current market options into each decision. We are vendor-agnostic by design. Our partnerships span more than 200 providers, and in most cases StrategIQ is paid by whichever provider you choose, so we have no reason to steer you to one platform. Working through us does not raise your price, and our market knowledge often helps negotiate better pricing and terms. Our technology overview checklist is a practical place to start the inventory. If budgets and renewals keep landing on nobody's desk, our fractional CIO / CTO service provides ongoing senior technology leadership to own the roadmap, budget and provider relationships. Scope, fees and how StrategIQ is paid are explained before you proceed. The first 20-minute conversation is free.