Tariffs, trade wars, cyber threats, and economic uncertainty are resetting budget expectations, signalling a shift toward more cautious growth planning, Forrester found.

Amid persistent volatility, leaders must turn to scenario planning and prepare for both deeper budget cuts and unexpected investment opportunities — protecting and prioritizing investments that create customer value, stopping spending on inefficient complexity, and embracing constant, low-cost experimentation to stay ahead.

While it’s no surprise that leaders are less bullish compared to last year, it’s not all doom and gloom, according to Forrester’s 2026 Budget Planning Guides.

Despite the uncertainty, 86% of tech leaders across industries are expecting increased budgets from the year before. Additionally, tech leaders in the financial services and healthcare sectors expect double-digit budget increases, driven by investments in generative AI (genAI), analytics, and threat intelligence.

Forrester’s budget guide advises organisations to increase their investment in data literacy and employee AI readiness programmes. Data and AI leaders must invest in persona-based data and AI literacy programmes, training all employees on the responsible use of AI as well as how to interpret data and AI-driven insights.

Leaders with a clearer grasp of their customers in uncertain times will be able to better engage proactively and should consider developing a rigorous data collection strategy. Investing in customer insights and data management is therefore paramount.

On the other hand, Forrester recommends abandoning a cloud-first strategy approach. New sovereignty and resilience regulations, increasing geopolitical tension, executive pressure to reduce costs, and the growing number of production-ready genAI use cases have switched to public cloud conversation from cloud-first to cloud-as-necessary.

Forrester also recommends a more radical approach to eliminate tech debt. Organisations should declare tech debt bankruptcy and outsource the legacy tech stack to ensure operational reliability while freeing up funds to build a modern, adaptive, and AI-powered ecosystem that drives innovation.

Beyond these, Forrester does recommend some areas for experimentation in 2026 budgets.

If they have not already done so, organisations should look at investing in agentic AI for task automation, first within a single app and then across business apps. Exploring the disruptive potential of agentic AI by experimenting with autonomous AI agents that can perform tasks and make decisions independently could be a worthwhile exploration. Firms can start by prioritising read-only/analytical apps to avoid the risk of breaking data entry or data quality rules.

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Enterprises can also collect relevant inputs from mobile, internet-of-things, and other edge devices to provide customers with timely, use-case-driven insights to build industry-specific edge intelligence.

Wide deployment of edge intelligence solutions is expected over the next two to four years, Forrester predicts, as developments occur in chipset functions, form factors, 5G networks, and powerful on-device and on-chip machine learning models.

“While conservative budget expectations are a fine starting point for 2026, now is not the time to get complacent,” said Sharyn Leaver, chief research officer at Forrester.

“With no end in sight to today’s volatility, leaders should be prepared for both more aggressive cuts and unexpected investment opportunities. They can achieve this through constant, low-cost experimentation and gain the edge to outmaneuver competitors the moment the opportunity strikes.

“Forrester’s Budget Planning Guides are designed to empower business leaders to invest wisely, scale back where needed, and experiment continuously to succeed in times of change.”