Triple Threat: Technology Leaders Invest Heavily in AI, Cloud, and InfoSec to Support Long-Term Growth

To mark the beginning of a new year, ETR hosted a series of interviews with IT decision makers following a standardized set of questions to determine the most (and least) pressing trends in enterprise technology. ETR’s 2025 Enterprise Tech Trends report outlines key developments in the IT sector amidst a backdrop of persistent inflation, evolving geopolitical tensions, and increased regulatory scrutiny. Executives from diverse industries discussed the impact of these challenges on tech budgets, strategic priorities, and vendor relationships. They highlighted trends such as a heightened focus on AI adoption, strategic cloud optimization, and the balance between cost-cutting and long-term growth opportunities.

The series consisted of interviews with four technology leaders from the ETR Community, each a seasoned expert in their field, including: Head of Delivery Assurance for a large healthcare enterprise; CISO & VP of IT for a higher education system; Director & Head of Data Analytics for a large retail enterprise; and CIO / CISO for a large IT services organization. Interview transcripts, recordings, and summaries are available for each call in the ETR Transcript Library, while this report aggregates key themes uncovered across the interviews.

Heading into 2025, generative and agentic AI are transforming workflows, though concerns around governance and compliance remain. At the same time, Internet of Things (IoT) and edge computing are improving connectivity and productivity across distributed workforces. With hiring slowing in some areas, companies are prioritizing reskilling and employee training to make the most of AI’s potential. Read on to explore platform consolidation, the impact of geopolitical shifts on IT talent hubs and operations, and the growing focus on data democratization to drive business intelligence.

This report combines insights from each interview guest with analysis from ETR’s latest data, including the January 2025 Technology Spending Intentions Survey (TSIS), Macro Views Survey, and other qualitative and quantitative sources in ETR’s portfolio. The report is split into four main sections: macro-level trends, cloud optimization, AI adoption, and information security trends, followed by closing remarks.

Vendors Mentioned: Alteryx, Amazon (AWS, Lambda, Bedrock), Amplitude, Anthropic, Atlassian, BMC Software, Cisco, C3.ai, Cloudflare, CrowdStrike, Darktrace, Databricks, Dell Technologies, Dropbox, Fortinet, GitLab, Google Cloud (Vertex AI), Hewlett Packard Enterprise, Holoconnects, IBM (Watson, Private Cloud AI), JumpCloud, Lacework, Lenovo, Meta (Llama, Meta Quest), Microsoft (Azure, Power BI, Copilot, Power Automate, Defender), MOVEit, Netskope, Okta, OpenAI (GPT Models), Orca, Palo Alto Networks, Proto, Pryon, Pure Storage, Qualys, Rapid7, Recorded Future, Rubrik, Salesforce (Agentforce), SentinelOne, ServiceNow, Snowflake, Tableau, Talend, Tenable, UiPath, UneeQ, Veeam, Wiz, Zscaler 

Macro Views: Growing Budgets, Increasing Geopolitical Uncertainty, and Evolving IT Strategies

Budget Trends. ETR survey data captures technology leaders’ evolving IT budget priorities; from education to healthcare and retail, the focus is on cloud optimization, cost containment, and selective strategic investments—in particular AI and cybersecurity—to offset economic headwinds. “The biggest focus for us in 2025 is balancing security and productivity,” stresses one CISO, “as more operations shift to the edge, closer to users and clients.”

While most sectors report flat or modestly increased budgets, trends vary significantly across industries. Some sectors, like healthcare, are seeing above-average growth, with one interview guest planning a 12% year-over-year increase for 2025, driven by edge computing and data analytics. Conversely, industries like higher education are experiencing budget reductions due to declining enrollment and restrictive government policies. Meanwhile, Services/Consulting anticipates a strong rebound in 2025 following a year of conservative spending.

ETR Data: In ETR’s January 2025 Macro Views Survey, 1835 respondents indicated an average increase of +5.3% year-over-year in their IT budgets, a notch above October’s estimate of +4.8%. The table on the left shows average CY 2024/2025 budget growth by sector for each ITDM in this interview series.  

Broadly, companies are mitigating rising costs through project deferrals, vendor consolidation, and selective spending on backlog projects. These include critical efforts like data modernization, compliance upgrades, and long-term digital transformation. As one panelist shared, “These could be large projects, data modernization efforts, or core competency-building use cases.”

Workforce. Some organizations are freezing hiring to avoid layoffs and manage financial pressures. “The first thing we looked at was staffing. That’s where you have to look, because it’s usually your biggest expense.” There is also an emphasis on reskilling and realigning talent and employee behavior to best leverage AI, if or until some staff are entirely replaced. “You’ve got to convince people that, one, you’re not coming for their job (whether you are or not), and two, [get them to] change their behaviors and [trust] that the technology actually works and will give them back good results.“ To this end, one ITDM noted how they’ve: “launched training programs focused on AI and data science to upskill employees and prepare them for new internal AI initiatives.” Still, others are strategically increasing headcount in key areas. One leader emphasized, “We continue to hire smartly, focusing on specific skill sets while retrenching in other areas.” Another executive highlighted, “Scaling without significantly adding headcount is a priority, but critical hires in AI and data analytics remain essential.”

ETR Data: Macro Views respondents also indicated an average increase of 2.2% in IT headcount growth over the next 6 months. This number is up from OCT24 estimates, but overall growth remains tempered, with 51% of respondents indicating that their headcount will not grow or that it will decrease.

Geopolitical Risk. Conflicts and tariff disputes are leading companies to rethink global operations. Some of our guests are pursuing near-shoring and diversifying talent hubs to reduce exposure to volatile regions or potential tariffs, particularly as technical expertise expands. “The cutting-edge skills are now available in those low-cost geographies. If you can hire folks in South America who are in the same time zone, even if they're 20% more expensive than, say, out of India or Southeast Asia, it's worth it.” Another healthcare leader similarly referenced disruptions in Ukraine which forced the relocation of their IT operations. “You see a lot of hubs that are being built in Central and Latin America. They've taken a lot of the wallet share from Eastern European technology and data hubs, and some of the other geographies in Asia.”

US and international politics and changing global trade policies are also shaping IT budgets; one Canadian higher education executive linked a decline in student enrollment to restrictive immigration policies, which in turn forced a 5% to 10% reduction in IT spending. Currency, tariffs, and potential tax reforms lead to uncertainty around long-term investments in staff and technology. “Simple things with the dollar strength and how that plays into the labor arbitrage piece can drive some of these decisions,” says one healthcare executive.

The Director and Head of Data Analytics for a large retail and consumer organization goes into more detail. “As an example, in Brazil, there is a legislation that has existed for a few years now that levies a 40% duty on any services that you procure outside of that market. If you're an operating company that has a presence in Brazil but you're seeking data services or tech services from, let's say, Argentina or Mexico and others, you're paying a significant amount of that duty. If that same sort of phenomenon translates over to the US, that can reflect a bit of a headwind for companies that are based outside.”

Integrated Platform Solutions v. Best-of-Breed. Consensus is towards platform-ized solutions that are simpler and more cost-effective, with fewer vendors to manage, though several executives mentioned potential drawbacks, including limitations in feature depth and flexibility. “We've shifted over the last 20 years. I used to work in environments where you'd want a Palo Alto, a Cisco, and a Fortinet, for example, because if an attacker could break through one, then they're stopped at the other two. I think that thinking has changed drastically. [Now] I think most of the industry is moving in that direction of vendor consolidation, a single pane of glass, and being able to manage within one console.”

Within healthcare, one executive is embracing the Microsoft Azure stack in large part for attached services they already use. “Whether it's from a Power BI perspective, or whether it's from the OpenAI that we already have invested in, but through the Microsoft connection rather than with OpenAI itself.” However, another executive expressed growing concern about vendor lock-in with integrated platforms, despite their cost and operational benefits. “I may be forced to adopt a platform because Palo Alto, CrowdStrike, Cloudflare and all these players are acquiring the smaller guys, the best-of-breed solutions, and integrating them in. Those kinds of consolidations are going to continue, and that’s going to force a platform approach longer term in and of itself.”

Cloud Strategy 101: Simplify, Consolidate, and Optimize

For several teams, cloud has begun to challenge staffing as their largest budget line items, though our guests see ample opportunity to rationalize spend. “We are on an enterprise plan, so we had certain levels, but we were way above that. We were able to cut back pretty significantly there.” Guests are interested in optimizing their cloud infrastructure and streamlining vendor relationships. “We will probably drop more capabilities in one or two vendors, which may result in reducing spend with a couple of other vendors.”

Several organizations have introduced dedicated FinOps teams to monitor and optimize cloud spending. By identifying inefficiencies and implementing compute-efficient architectures, these teams are driving significant cost savings while ensuring scalability. A director shared: “Our FinOps team identified a 15% reduction opportunity by restructuring compute resources.” These teams are becoming essential for managing escalating cloud costs. With monitoring tools and user education, organizations aim to maintain scalability and elasticity; one director even introduced an entirely new FinOps team specifically to address compute efficiency, which he says has been neglected in the past.

Notably, some have begun to reassess traditional multi-cloud strategies; instead of spreading workloads across multiple providers, they are focusing on one or two platforms where they can maximize discounts and benefit from a more unified ecosystem. “When you're procuring from a PaaS provider, you're elevating your purchase tier as well—if you're a customer of Salesforce, and you're using Agentforce as an example, or if you're a ServiceNow customer, you've elevated to the Pro Plus model tier.”

ETR Data: Overall Cloud (IaaS, PaaS) spend is anticipated to grow +9.5% in 2025 vs 2024 (spend-weighted average), a 0.7 percentage point increase from the October estimates. In this category, spend projections far outpace pricing. Sixty-three percent (63%) of respondents anticipate increasing Cloud spend by 1% or more in 2025.

 Most consistently referenced is Microsoft's role as a strategic partner, specifically its cloud infrastructure, Copilot for productivity, Power BI for analytics, and Defender for security. Microsoft's partnership with OpenAI through Azure enabled early access to generative AI models; their integrated ecosystem reduces the need for disparate, niche tools. “A great example is between Microsoft and OpenAI: Microsoft announced AI Foundry in their Ignite a couple of weeks ago, which is very similar to Databricks' Mosaic, which essentially enables multi-model agnostic gen AI orchestration for folks.” Microsoft is seen as the leading cost-effective solution to enable streamlined and scalable enterprise IT operations. “Microsoft has become pretty nimble, I would say, over the last three years,” says one healthcare executive. “I've been pleasantly surprised.” Another AVP agrees: “I think it's about the Microsoft play right now.”

 Databricks and Snowflake are favored for analytics and data transformation; on board with Amazon AWS and Microsoft Azure, they tend to replace Alteryx, Tableau, and Talend. “As Amazon and Microsoft have significantly improved their BI and data tools, it makes more sense if you're using a workload in the cloud to leverage that and then be very smart about choosing one or two other technologies—whether it's Snowflake or Databricks—and sunset a lot of the technologies you're using prior.” Snowflake is crucial for data warehousing, and its ability to centralize and streamline data management across various organizational silos. “Snowflake is realizing that they need to invest more in AI / ML, streaming, and container technologies, and they're doing that.”

ETR Data: As noted by our guests, shared accounts data from ETR’s January 2025 Technology Spending Intentions Survey (TSIS) shows high-volume spending on Databricks and Snowflake among those spending on AWS or Microsoft Azure within Cloud Computing (top image). Meanwhile, the same analysis shows that these customers have indicated weaker levels of spending on Tableau, Alteryx, and Talend within the Analytics/B.I./Big Data sector (bottom image).

Generative and Agentic AI: Transforming Workflows and Driving Innovation

Generative AI. Early adoption is primarily for internal use cases, enhancing workflows and data analysis. Broadly, these executives would prefer to use AI tools embedded within existing products, rather than develop their own models. “Part of the reason for embedded is, you have the existing vendor relationships,” says one AVP. “If that's a good vendor relationship and they're able to meet the objectives that you're trying to achieve, I think you're not expanding that risk footprint of bringing in new vendors and unknowns.” They point to AI within ServiceNow, for example, as already transforming their support models, and other AI-powered digital assistants that are increasingly integral to streamlining complex and time-consuming tasks. “Whether that's the chatbot, or whether that's the feature where your tier one support can have an AI response automatically drafted for them when they're trying to respond to a client, those are two examples of embedded technology where absolutely I'm willing to pay to just augment that service model and utilize the AI built in.”  

Each guest said that their companies utilize Microsoft Copilot to some degree, but adoption strategies vary by sector. For example, limited discounts are curbing Copilot’s deployment within higher ed. “Students will not be getting Copilot unless Microsoft steps up and gives us some massive deal or incentive on that, and faculty have not been rolled out on Copilot yet. For now, we're rolling it out to teams within marketing, teams within finance, HR, and IT.” Copilot offers transformative potential, though user training is key. “Copilot alone, if you give it to a user, it tends to fall short and then people just give up on it. But I think with the training, people are able to leverage it and utilize it to the best of their advantage.”

ETR Data: ETR also collected spending intentions data for Microsoft Copilot. Among those that indicated use of Microsoft Office within the JAN25 TSIS, 84% said that they also use Copilot. Adoptions for the tool remain robust at 24%, and 50% indicate that they are already Increasing spend on the vendor. Meanwhile, negative spending remains nominal.

Another CISO within IT services sees only incremental benefit from tools like Copilot and Atlassian, though believes at a minimum they are at least worth the cost. “The jury is still somewhat out on those tools. There are definitely productivity improvements, but are they game changers yet? I don’t think so, but I think they are significant enough that they’re paying for themselves.” Many use Copilot instead of other tools simply because it is already integrated within their Microsoft tech stack. “We may go big on not only Azure, but everything that they bring to the table in the Azure ecosystem.”

Agentic AI. Our guests look forward to agentic AI that can manage sophisticated processes end-to-end. “I think I'm not going to be the first person to say it, but agentic AI is really the top trend of 2025. That's where the acceleration of gen AI, as we've seen it, comes to life. You're seeing entire processes, not just an individual task, that are being automated and run through an AI—and how it can do that with not just better productivity, but better accuracy and sharper decision-making as well.” However, they again emphasize the need for robust governance frameworks and gradual, risk-aware implementation, and caution that ROI may be hard to measure. “People are seeing a return, but it’s typically around productivity, and with productivity you usually don’t see an ROI—even if the productivity increase is significant, let’s say 20% to 25% or more—you still don’t see a payback on that for six to nine months, maybe even a year. People have to change the way that they do their work, and that has to be persistent.”

ETR Data: ETR’s NOV24 AI Product Series asked respondents what return on investment (ROI) their companies have realized from early AI spending. Just under half of respondents (46%) have realized a positive ROI from AI spending thus far, with over one quarter (27%) not measuring and just under one quarter (22%) indicating that they are measuring but have yet to see a return on their investments.

Data Democratization + Governance. A common theme was the importance of investing in data quality and constructing scalable, future-ready data architectures, hoping to break up functional silos and create a “single source of truth,” essential for analytics and AI/ML. “Many companies that I interact with really looking at how they continue to strengthen their data sets and their access to data, removing functional silos, and having the ability to democratize your data down to the persona level, and down to places where you can have a more dynamic nature relative to the more static past that we come from.” That said, AI in all sectors will require explicit policies, rules, and operating models. “How do you govern what's happening? It's all of the aspects that help you determine what the [AI] operating model looks like.” One director describes the strict controls they have implemented to prevent unintended or non-compliant actions. “We won't let it go outside our firewalls, because the darn thing goes and does stuff that it's not supposed to do it. It does copyrighted things.”

Regulatory Complexity. Stringent data and AI-related regulations, particularly in Europe, are driving up compliance costs; these requirements not only increase operational complexity but also limit how emerging technologies, such as generative AI, can be deployed. In heavily regulated industries such as healthcare—subject to “good practice” quality guidelines that govern the development and manufacturing of pharmaceuticals and medical devices—leaders emphasize the increased burden of adhering to overlapping regulations: US companies may be subject to CCPA in California, GDPR in Europe, and more. “France and Germany have their own most stringent data protection residency laws. China has their PIPL around data localization residency. India is very close to doing it. Australia has it. Across the globe, more and more countries are enforcing political compliance and regulatory compliance.”

Within generative AI, challenges include ensuring data residency compliance, intellectual property protection, and safeguarding against AI hallucinations. “You can't have something used in clinical trials that’s going to make anything up. We have such severe, stringent required testing, that you wouldn't believe that something like that is not even speculatively possible.”

Balancing Innovation and Protection in an Evolving Cybersecurity Landscape

 Information security remains a top priority for IT leaders as they grapple with a rapidly evolving threat landscape. Generative AI is both an opportunity and a risk, with leaders expressing concerns about its potential to accelerate cyberattacks while defenses lag behind. One executive noted, “One of my big concerns about AI is how quickly and efficiently it can be leveraged by malefactors, whereas trying to leverage similar defenses takes much more time, effort, and expense.” Organizations are shifting from best-of-breed security solutions to consolidated platforms, to streamline operations and reduce costs. “My peers are talking about adopting a core platform and then augmenting it in the areas where it’s not adequate.”

CrowdStrike is praised for its behavioral analytics, though its high price and last July’s outage have led some of our guests to consider alternatives, such as Microsoft Defender. “Microsoft is doing really well when compared to some of the other endpoint protection solutions out there,” says an executive in higher education. “Specifically, because we have moved to the higher tier in licensing, the play for me makes sense, because I'm already paying for A5 licenses.” “I’m not a Microsoft defender,” says another CISO, “But their stuff is pretty good. It is adequate, I would say, for most companies, and they just give you so much value for the cost that it’s just hard to pass up.”

Despite its challenges, CrowdStrike is still viewed as one of the best in the endpoint security space, though it notably lags in cloud. “Most of these vendors are really good at their core competencies, but they’re trying to expand so quickly that their solutions just are not adequate to take the risk of implementing them.”

ETR Data: In the second TSIS cycle since the July 2024 CrowdStrike outage, the vendor’s Net Score has improved to a modest 20% after bottoming out in OCT24. While negative spending intentions have eased survey-over-survey, they remain elevated in historical terms along with softer positive spend.

Vendors like Palo Alto Networks, Fortinet, Netskope, and Zscaler were highlighted for their roles in securing distributed workforces with integrated SD-WAN and SASE solutions, while CrowdStrike and Microsoft continue to strengthen their platforms through consolidation. However, this trend toward platform-ization has raised concerns about losing access to best-of-breed solutions. Identity management vendors like Okta faced scrutiny following high-profile breaches, underscoring the critical need for robust and reliable security.

Top of mind for 2025, edge computing will improve accessibility, performance, and security across distributed environments. In higher education, one executive looks for edge computing to help them overcome network and bandwidth limitations. “I can essentially move the edge closer to them, have them connect to my environments, and connect them to closer routing services, and then they feel like they're just in the same environment as us—and then you can wrap around the cybersecurity tools and techniques in order to support and secure those connections.” Integrating SASE and SD-WAN capabilities into edge computing solutions ensures data protection and privacy, a priority for remote and distributed workforces.

ETR Data: Pictured above, ETR’s 2024 Observatory for Secure Access Secure Edge (SASE) asked respondents about which vendor would be the most prioritized SASE offering were they to undergo a complete rebuild. The data set was derived from a survey of 319 IT decision makers with direct utilization and evaluation knowledge of the specific tools listed.

IoT devices present unique security concerns; at one university, vending machines with hidden cameras were collecting demographic data for market analysis without consent. “We're adding all these IoT devices and additional bandwidth. Then you're worried about things like, are these things capturing data that you don't want leaving your network? Are they calling home? Is it a country that you probably don't want that data to go to?”

 Some guests think this may be the year for quantum computing to reach the mainstage, reimagining traditional architectures; Google’s Willow quantum chip draws attention, but practical applications remain limited. “We've been talking about this for ten years, and that everyone keeps saying quantum computing is going to come, and it's going to break everything in terms of our encryption algorithms and those kinds of things. But I think we're getting closer and closer to the days that were predicted years ago, in terms of what that can bring to the table, opportunities as well as risks.” Another director, however, suspects an overhyped trend. “I think there's a lot of talk about quantum technology and its ability to influence the way technology stacks and architecture work today, but I think it's very nascent for it to have any measurable impact in 2025. I think it's much more of a long-term theme and phenomenon that's going to take place.”

As organizations navigate these challenges, the focus remains on balancing proactive defense measures with strategic vendor selection, particularly as AI-driven threats grow more sophisticated and infosec spending becomes increasingly scrutinized.

Conclusion: Adapting to an Era of Rapid Transformation

As organizations head into 2025, the themes discussed in this report reflect an IT landscape defined by both opportunity and complexity. From the transformative potential of generative and agentic AI to the evolving dynamics of cloud optimization, information security, and data democratization, leaders are navigating an era of accelerated innovation. However, these advancements come with challenges—whether it’s balancing short-term cost pressures with long-term growth, addressing governance and compliance in AI adoption, or rethinking IT talent strategies amid geopolitical shifts.

The insights shared by industry experts emphasize the importance of adaptability and strategic focus in this shifting environment. IT leaders are prioritizing reskilling, vendor consolidation, and proactive defense measures to ensure they remain competitive. As we look ahead, the ability to leverage emerging technologies effectively while maintaining agility will be a defining factor for success in the enterprise technology space. This report serves as both a reflection of current priorities and a guide for navigating the road ahead.