Planning your 2027 IT budget may look different than it has in previous years. Even if your organization receives an increase, additional funding may not go as far as expected.
Hardware costs continue to rise, particularly for components such as memory, while tariffs and supply-chain factors add another layer of uncertainty. That means a 7% increase in your IT budget doesn’t necessarily translate into 7% more equipment.
For organizations across the Upper Midwest, understanding what is driving these costs will be important when setting realistic budgets and planning technology purchases for 2027.
What do 2027 economic projections mean for IT budgets?
Before looking specifically at technology costs, it helps to understand the broader economic outlook.
The Federal Reserve’s June 2026 Summary of Economic Projections projects 2027 real GDP growth of 2.3%, PCE inflation of 2.3%, core PCE inflation of 2.5%, and a federal funds rate of 3.6%.
Overall, that points to a relatively stable economic environment. The Federal Reserve isn’t projecting a major recession or an inflation spike in 2027. Inflation is expected to move closer to the Fed’s longer-term 2% target, while economic growth remains positive.
So why could technology cost more in 2027?
The answer isn’t necessarily the broader economy. Hardware costs are being influenced by more specific factors, including rising component costs, supply constraints, and changing duty and tariff costs. For IT leaders building next year’s budget, understanding those factors may be more important than simply applying the general inflation rate to last year’s technology spending.
Your IT budget may increase, but so can the cost of the equipment
The challenge for IT leaders is that budgets and purchasing power aren’t necessarily moving in the same direction.
According to Forrester’s 2027 Budget Planning Guides, more than 80% of leaders expect their budgets to increase over the next 12 months, with as many as one-quarter anticipating increases of 10% or more.
That sounds encouraging for IT teams. But a larger budget does not automatically mean greater purchasing power.
Component costs are also increasing. IDC reports that memory supply challenges are expected to continue throughout 2027. Prices are expected to remain elevated, with no return to 2025 pricing levels within the forecast period.
For organizations planning server, storage, or other memory-intensive purchases, that can have a meaningful impact on the final price of a configuration.
Duty costs can vary from one quote to another. What you pay can depend on the specific product, where it was manufactured, and which trade policies are in effect when you purchase it. There isn’t necessarily one rate you can apply across an entire refresh and expect it to accurately reflect your costs.
That’s why duty exposure should be evaluated for individual products and quotes rather than as a single percentage across your entire hardware budget.
The mistake to avoid is treating last year’s price as this year’s forecast
Simply adding a percentage to last year’s quote assumes the factors affecting the cost of the equipment will move predictably. In today’s market, that may not be the case.
Memory prices, tariffs, supply conditions, product configurations, and manufacturer pricing can all change between the time you build your budget and the time you make the purchase. A quote you receive today gives you a useful benchmark, but it does not tell you the equipment cost a few months from now.
Instead, build your budget around the expected scope of the refresh and the factors that could move the final cost. Then leave enough flexibility to account for those changes. Current quotes can help establish a realistic starting point, while outsourced procurement and lifecycle planning can help you monitor pricing and adjust your purchasing strategy as the time to buy gets closer.
Financing is a real decision again
This is a question many organizations stopped asking when interest rates were low. As you plan for 2027, it is worth putting both options back on the table.
Financing has a real cost. Based on the Federal Reserve’s 2027 projections, the federal funds rate is expected to be around 3.6% at the end of 2027. While that doesn’t mean your financing rate will match the federal funds rate, it is a reminder that borrowing is no longer a negligible part of the equation.
Both approaches can make sense. Buying equipment outright may make sense when you have the cash available and expect the equipment to have a long, useful life. Financing can spread the expense over several years, align payments more closely with the period in which you are using the equipment, and avoid putting the entire purchase against a single fiscal year.
The right choice depends on your cash position, balance sheet, financing options, and length of time the equipment to remains useful.
The important thing is to actually compare the two. Rather than automatically repeating the approach you used for your last refresh, model both options using current equipment prices and current financing rates.
Put the comparison in writing and bring it to your CFO. If you’re an IT director defending a significant line item, a written CapEx-versus-OpEx comparison can change the conversation. Instead of presenting a technology request, you’re presenting a financial analysis based on actual equipment costs and financing assumptions.
Financing is one consideration when building your 2027 budget. Cyber insurance is another.
How can cyber insurance affect your budget?
Cybersecurity is often easier to prioritize when you can connect the investment to a cost your organization is already paying. Cyber insurance is a good example.
Cyber insurance premiums have been on an upward trajectory. S&P Global Ratings’ Cyber Insurance Market Outlook 2026 projects annual cyber insurance premium growth of 15%-20%, with the market reaching roughly $23 billion by the end of 2026. This is compared to about $14 billion at the end of 2023.
That is a projection for the overall market, not a prediction of what your organization’s next renewal will cost. But it is another reason to account for cyber insurance when planning your 2027 security budget.
The other consideration is what insurers expect to see in place. Cyber insurance applications increasingly require organizations to demonstrate that their security controls are deployed and operating, rather than simply confirming that they have them.
While requirements vary by insurer and organization, four areas commonly receive attention:
- Phishing-resistant multifactor authentication to protect user identities and accounts.
- Endpoint or extended detection and response with continuous monitoring and active response, rather than simply collecting alerts.
- Tested backups that have been validated through recovery exercises, rather than simply running on a schedule.
- An incident response plan that has been documented and tested through an actual exercise.
These requirements make cyber insurance more than an annual renewal conversation. They can also provide a useful framework for evaluating where your security budget should go.
For example, managed detection and response addresses continuous monitoring and active response. Multifactor authentication addresses the identity controls commonly required by insurers.
For recovery, backup as a service and disaster recovery as a service provide the technology foundation. And because employees remain an important part of an organization’s security posture, cybersecurity awareness training should also be considered.
The point isn’t to spend more on security simply to satisfy an insurance application. These controls should reduce risk first. If the same investments can also help meet your insurer’s requirements and protect your coverage and renewal costs, they become easier to evaluate as part of the overall 2027 budget.
Insurance and hardware are costs you can model. Where your consolidated workloads physically reside is becoming another consideration.
Where should consolidated workloads live in 2027?
As organizations consolidate workloads and rethink their infrastructure, another question deserves attention: where should those workloads physically live?
The rapid growth of AI is changing the data center landscape. Goldman Sachs Commodities Research expects U.S. data center power demand to more than double between 2025 and 2027 as organizations invest in AI infrastructure.
The location of your workloads matters. Cost and latency have traditionally been two of the primary considerations when deciding where infrastructure should live. As demand for data center power continues to increase, organizations should also consider the availability of the power, connectivity, physical infrastructure, and services they will need to support those workloads over time.
This is particularly relevant when you’re working toward a specific refresh or migration deadline. Data center construction, power expansion, and network infrastructure all require planning and investment. That means, the infrastructure supporting your workloads should be evaluated as part of the overall technology strategy, not an afterthought.
For organizations in the Upper Midwest, regional data center options can provide an alternative to keeping infrastructure entirely on-premises or relying on a distant facility.
At WIN, we operate an AI-ready fiber network across the Upper Midwest, along with Regional Edge Center capabilities and colocation facilities. Connectivity to those facilities runs over 22,000+ miles of WIN owned and operated fiber network. For organizations evaluating where consolidated workloads should live, that combination provides access to regional data center infrastructure and connectivity without requiring the organization to build and maintain its own facility.
What should we do in the next quarter?
There is still time to influence what your 2027 budget ultimately buys, but the window is getting shorter. With 2027 just around the corner, now is the time to narrow the scope of your plans, identify potential gaps, and build flexibility into the budget.
- Establish a hardware pricing baseline. IDC expects memory prices to remain elevated well into 2027. Current quotes can help establish where pricing stands today, but they should be treated as a starting point, not a prediction of what you’ll pay when you purchase. Build room into the budget for pricing to change.
- Run the CapEx-versus-OpEx comparison using current rates. Model both options using today’s financing assumptions rather than automatically repeating the approach you used during your last refresh. This gives you a better understanding of how each option could affect your budget and cash flow.
- Review your cyber insurance requirements before renewal. Compare your insurer’s current requirements with the controls you actually have deployed. Identifying gaps now gives you more time to address them before they become a problem during the renewal process.
- Build your budget around the factors you can identify today. Define the scope of your technology needs, establish realistic pricing assumptions, evaluate financing options, and account for insurance requirements. Then build in enough flexibility to accommodate changes between budgeting and purchasing.
If your internal IT team doesn’t have the bandwidth to manage all four at once, consider managed IT services. Managed IT can provide additional expertise and support without requiring you to add internal headcount.
Closing the gap between the budget and what it buys
Your 2027 IT budget doesn’t need to predict exactly what technology will cost. It needs to recognize that the factors influencing those costs are changing. Hardware prices, financing rates, cyber insurance requirements, and infrastructure decisions can all affect how far your budget ultimately goes.
The goal isn’t to predict the exact price of a technology purchase months from now. It’s to understand what you need, establish reasonable assumptions, and give yourself enough flexibility to adjust as conditions change. That’s a much stronger approach than simply taking last year’s number and adding a percentage.
For organizations planning a major technology refresh in 2027, the time to evaluate those decisions is now.
Want to learn more? Talk to a WIN Specialist to evaluate your technology refresh and understand how these factors could affect your IT budget.