An overwhelming majority of IT leaders are facing higher infrastructure costs as cybersecurity threats and recovery requirements put additional pressure on technology budgets, according to new research from 11:11 Systems.
The company’s 2027 State of IT Infrastructure Resilience report, based on a survey of more than 700 IT leaders, found that 91% experienced rising data center infrastructure costs over the past year, with an average increase of 13%. Meanwhile, 74% expect to increase spending on data protection, backup, and recovery in 2027.
For MSPs, MSSPs, and other channel partners, the findings point to opportunities to help customers manage infrastructure spending while expanding managed backup, disaster recovery, cybersecurity, and virtualization consulting services.
91% of IT leaders report rising infrastructure costs
The 2027 State of IT Infrastructure Resilience report, which surveyed more than 700 IT leaders, highlights that infrastructure costs are becoming increasingly significant, elevating cost management to a strategic priority.
Specifically, the convergence of security and AI adoption complexity is driving costs across those surveyed:
- Cyber risk and infrastructure costs converging: 44% said cyberattacks are the top concern in their data centers, and 74% expect data protection, backup, and recovery budgets to increase in 2027.
- Cyberattacks remain costly: 69% have experienced one or more attacks in the last 12 months, with 25% of respondents experiencing three or more. 63% also report the average cost of one hour of downtime from a cyberattack was more than $250,000.
- Complexity is the top barrier to resilience: 56% identified the complexity of planning for cyber incident recovery as the greatest challenge, followed by a lack of in-house expertise and insufficient budgets.
- AI investment outpacing readiness: 57% are investing in AI-enhanced IT or security toolsets, but only 19% have operational AI-enhanced backup or disaster recovery capabilities. 78% are concerned that AI-accelerated malware or ransomware will make attacks more sophisticated or frequent.
“This research quantifies what IT leaders are already feeling; the challenges are stacking up faster than the budgets,” said Jason Buffington, Principal Analyst and Founder of Data Protection Matter, which conducted the research. “Cyberattacks remain an ever-present threat, and now organizations have to govern their own AI while defending against the attackers’ AI, all while rising hardware costs squeeze budgets that were already tight.”
“For many organizations, the way through that storm is leaning on expertise as-a-service to reduce complexity, while modernizing how they protect and recover their data,” Buffington continued.
VMware licensing and AI add to infrastructure challenges
In addition to data center expenses, the survey finds that over three-quarters of respondents agree that cyber insurance premiums, hypervisor licensing costs, and staffing and skills all play a key role in decision-making – alongside cloud hosting, server, and hardware costs.
“Many IT leaders are reassessing their virtualization strategy as VMware licensing and commercial terms evolve, but the economics aren’t one-size-fits-all. For some environments, VMware may remain the right choice once the full cost and complexity of switching are considered,” said Justin Giardina, chief technology officer, 11:11 Systems.
“The decision is about more than license price: teams also need to weigh migration effort, operational complexity, security, and recovery requirements. The goal isn’t to stay or switch by default, but to choose an infrastructure path that balances cost with security, recoverability, and resilience as workloads evolve,” added Giardina.
READ MORE: We spoke with 11:11 Systems executives about how the provider supports VMware customers in October.
What rising infrastructure costs mean for MSPs
The findings in the 2027 State of IT Infrastructure Resilience report point to growing opportunities for channel organizations as companies seek to manage rising infrastructure costs while improving cybersecurity and disaster recovery.
With 74% of respondents expecting data protection, backup, and recovery budgets to increase in 2027, MSPs and MSSPs could expand recurring revenue through managed backup, Disaster Recovery-as-a-Service (DRaaS), ransomware protection, and business continuity planning. Partners can also differentiate themselves by bundling these services with infrastructure monitoring and recovery testing.
Further, rising data center costs and changing VMware licensing economics also create opportunities for VARs, SIs, and MSPs to provide infrastructure assessments, virtualization consulting, cloud optimization, and migration services.
Additionally, the gap between AI investment and AI-enhanced recovery readiness creates opportunities for MSPs and MSSPs to expand into AI security, threat monitoring, ransomware defense, and automated recovery services.
Ultimately, the channel’s opportunity is to help customers balance infrastructure spending with security, operational efficiency, and business continuity while generating additional recurring services revenue.
READ MORE: VMware Explore 2026 showcased how Broadcom is building the popular virtualization offering with the AI-fueled future in mind.