Are You Really Overspending on IT—Or Just Under-Managing It?

If your IT budget feels like it’s growing faster than you can track it, you’re not alone. According to West Monroe’s State of B2B Software & AI Spend report, 86% of U.S. companies increased IT spending in the past 12 months, and 85% expect to do so again next year (Journal of Accountancy, 2025).

Yet nearly two-thirds (63%) of executives believe they spend more than their peers (West Monroe, 2025). That misperception often triggers defensive, short-term cost-cutting rather than strategic optimization. As the Journal of Accountancy article notes, “When organizations think they’re overspending relative to competitors, they become defensive rather than strategic, and cost-cutting becomes the primary priority.”

Most organizations now dedicate 7% or more of total revenue to IT (West Monroe, 2025). And while cost pressures remain high, the drivers of spend are shifting rapidly. Artificial intelligence (AI) tops the list: 23% of IT budgets are already allocated to AI initiatives, and 91% of leaders expect AI to increase overall tech spend in the coming year—including 47% who anticipate a “significant” increase (West Monroe, 2025). In fact, 42% of respondents selected “scaling AI and data capabilities” as their top investment priority—twice as popular as “improving cybersecurity and risk resilience” (West Monroe, 2025).

AI isn’t replacing people—it’s expanding capacity. While 25% expect AI initiatives to significantly increase headcount, just 1% expect them to significantly decrease it (West Monroe, 2025). That’s a strong signal that organizations see AI as an accelerator, not a cost reducer.

At Tech Advisor Services, we see a consistent pattern: companies are spending more on technology but managing it with limited visibility. Multiple vendors, auto-renewed contracts, and siloed purchasing make it difficult to distinguish what’s strategic from what’s simply habitual. When organizations benchmark pricing, normalize contract terms, and centralize oversight, they often uncover 15–25% waste from duplicate SaaS licenses, 20–30% overpayment in telecom contracts, and cloud infrastructure costs that have quietly doubled over time (TAS benchmark data).

These aren’t overspending problems—they’re oversight problems.

To shift from reactive to strategic, start with three simple steps. First, benchmark the market—compare your spend and contract terms to verified data, not gut feel. Second, tie spend to outcomes—every category, from connectivity to AI, should map to measurable value. Third, centralize vendor management—bring contracts and renewals under one governance process for better forecasting and leverage.

Most companies aren’t truly overspending on IT—they’re under-managing it. As budgets rise, visibility and accountability must rise with them. If you’re unsure how your technology spend compares to peers—or how to align it with measurable outcomes—Tech Advisor Services can help you make sense of the numbers and get more from every dollar invested.

Because the question isn’t how much you’re spending.
It’s how much you’re getting back.

References:
Journal of Accountancy (2025, Oct 2). Is spending on technology spinning out of control?
West Monroe (2025). The State of B2B Software & AI Spend.