Every week I’ll provide updates on the latest trends in cloud software companies. Follow along to stay up to date! MS CIO Survey There’s a lot of attention on what happens to spending / budgets over the coming 18 months with the broader economy weakening. This week we got a peak into the enterprise buyer mindset with the quarterly CIO survey from MS. Budget growth for 2022 was revised down a full 1% from the prior quarters survey (from 4% to 3% ), demonstrating near term budget pressure. The expected budget growth for 2023 currently sits at 2.8%. While this still shows an expectation for “growth,” the 10 year average for annual budget growth (in the MS Surveys) is 4.1%. So clearly the early expectations for growth in 2023 are coming in low. Within the broader IT budgets, software did have the highest growth expectations for 2023 at 3.1%. The overall takeaway seemed to be as uncertainty persists, companies plan to spend less. At the same time, the expectations are still for budget growth, and we’ll see how that trends. In older MS CIO surveys, budget expectations went negative only in 2009 and 2020. The graph below shows budget growth expectations over time. The purple dot at 2.8% at the far right is the initial expectation for 2023 budget growth. As you can see in the visual while the expectation for 2023 is lower than whta we’ve seen historically, it’s not that much lower. My read is that there’s still some optimism built into the budget expectations that a deeper hard landing won’t happen, and if the economy continues to worsen we could see a bigger decline in budget expectations (and thus forward estimates).