Enterprise IT Budgets Surge on AI Spending as Vendors and Buyers Diverge on Priorities

A fresh survey of 316 U.S. technology decision-makers reveals a dramatic acceleration in AI budget allocation. West Monroe's Thursday report found that nearly three in four tech leaders are committing more than 10% of their IT budgets to AI capabilities, a sharp jump from roughly one-quarter of executives taking that step in the prior year.

The surge in AI spending is forcing enterprises to make hard choices about where money flows. Most technology leaders are responding by expanding overall budgets to accommodate AI demand, though some are pursuing alternative strategies: consolidating their vendor rosters, redirecting funds from other areas or reducing the number of software licenses they purchase.

Software vendors, however, see the situation differently. Many are reporting that customer appetite for AI is growing faster than enterprises expect their budgets to expand, creating a fundamental mismatch between supply and demand expectations.

The Buyer-Seller Gap Widens

This divergence between what enterprises want and what vendors are pushing reflects deeper disagreements about priorities and success measures. According to Bret Greenstein, chief AI officer at West Monroe, "Buyers are funding practical use and foundational capabilities, while sellers are already looking toward an agent-led future."

The two sides also clash on pricing preferences. Technology executives favor straightforward models—enterprise subscriptions and consumption-based pricing that offer predictable costs. Software providers, by contrast, are advocating for hybrid approaches that blend traditional pricing with outcome-based models tied to business results.

Dhaval Moogimane, senior partner and software industry lead at West Monroe, observed that "AI is already a budget decision, but buyers and sellers are moving at different speeds. Buyers' choices about what to buy, where to invest and how they want to pay don't always match sellers' expectations."

Where Priorities Align and Diverge

Both enterprises and vendors agree on near-term goals: boosting employee productivity and deploying AI assistance tools rank high on both sides. But the emphasis shifts when looking further ahead. Technology leaders prioritize infrastructure, model consumption, platforms and talent acquisition, while software companies are increasingly focused on AI agents as the next frontier.

Greenstein noted that "Software companies need to understand changing buyer preferences and their adoption of agents outside of software products."

Taking Control of AI Spending

To manage runaway AI costs, technology leaders can take several concrete steps: renegotiate existing vendor agreements, implement rigorous cost tracking across their entire technology stack and monitor how much AI capacity they are actually consuming. West Monroe's research indicates these efforts will require IT teams to add new management layers and oversight functions.

As AI reshapes the software landscape, the transformation is fundamental. Greenstein summed up the shift: "AI is now eating software — but software isn't disappearing. It's being rebuilt around AI."