What AI's growing share of tech spending means for enterprises in 2027

Growing investment in AI is challenging enterprises to rethink IT budgets. Forrester forecasts that AI will account for about 20% of business technology spending in 2027. The estimate, included in an Oct. 21 report, includes infrastructure spending by technology vendors; it doesn't mean the average enterprise will devote that share of its own IT budget to AI.

In this Q&A, Brian Hopkins, an analyst at Forrester, discusses the pressures this is putting on enterprise budgets, how CIOs can prioritize spending, and how to judge whether AI investments deliver lasting value.

What's driving the increase in AI spending?

Brian Hopkins: Almost all of the growth comes from infrastructure and computing capacity — servers, chips, cloud services, AI model access and software subscriptions.

AI is also changing how companies pay for software. Traditionally, organizations could estimate an application's annual cost and budget accordingly. With generative AI, costs are harder to predict. Vendors are introducing token-based consumption, usage charges and credits. And agent costs vary with task complexity and the computing power required.

Where can CIOs find money for AI investments?

Hopkins: Enterprise software spending is rising more slowly than inflation, eroding purchasing power.

To compensate, companies are pushing for lower prices on IT services contracts, arguing providers should pass on AI-driven efficiency gains, and are bringing software development, support, and customer service in-house to cut external costs.

Where should enterprises avoid cutting technology spending?

Hopkins: Security is the obvious one. Organizations have delayed security investments because they view security as a cost center. But risks are becoming more urgent as attackers use AI agents to find and exploit vulnerabilities at a scale we haven't seen before.

These longstanding issues are converging just as rising AI costs put additional pressure on IT budgets.

What are companies getting wrong about the ROI of AI?