With NIS2 implementation now underway across the EU, a new Censuswide survey commissioned by Veeam Software reveals the significant impact on businesses as they adapt to this key cybersecurity directive.
The study found that, while most IT leaders are confident about meeting NIS2 compliance, the directive has also amplified existing challenges, such as resource limitations and skills shortages.
It also found that these ‘skills gaps’ are the number one pressure point for EMEA organizations, with 30% saying they have dipped into recruitment budgets to support NIS2 compliance efforts.
Budget secured – but at a cost
survey exposed that while IT leaders have managed to secure enough budget to meet the NIS2 directive, the impact on other areas could be significant.
Sixty-eight percent of companies report receiving the necessary additional budget for NIS2 compliance. However, 20% identified budget as being a significant barrier to achieving compliance.
Since the political agreement for NIS2 in January 2023, 40% of businesses have faced decreased IT budgets and 20% have unchanged financials.
Moreover, 95% of organisations have diverted funds from elsewhere in the business to cover NIS2 compliance costs.
Specifically, 34% of companies have dipped into their risk management budgets, 30% from wider recruitment, 29% from crisis management, and 25% from emergency reserves.
This reallocation underscores further strain on these companies’ already tight financial resources.
Edwin Weijdema, field chief technology officer EMEA at Veeam, says: “Securing adequate budget for cybersecurity is often a challenge for IT leaders, but the strict penalties and emphasis on corporate accountability from NIS2 may help ease that process. However, as most IT budgets are either being cut or remaining stagnant – effectively shrinking due to rising business costs and inflation – NIS2 is pulling from an already limited pool.
“It’s particularly concerning to see funds being redirected from recruitment and emergency reserves. NIS2 shouldn’t be treated as a crisis, yet one in four businesses appears to view it that way.”
Adding fuel to the fire
The survey also highlighted the main business pressures felt by IT leaders. With NIS2 ranking low on the priority list at #10, this emphasizes the extensive array of challenges faced at the senior level.
The top five challenges are the skills gap (24%), profitability concerns (23%), digital transformation (23%), the rising cost of doing business (20%), and a lack of resources (20%).
These findings reveal that resources – both human and financial – are the main limiting factors for IT leaders, yet NIS2 demands both.
To become compliant, companies are taking various steps: conducting IT audits (29%), reviewing cybersecurity processes and best practices (29%), developing new policies and procedures (28%), investing in new technology (28%), and increasing budget allocation for cybersecurity (28%).
The primary ‘enablers’ of NIS2 compliance include new technology solutions (27%), IT audits (25%), and internal organisational skills (25%), which all demand valuable budget and expertise.
IT budget dominated by security and compliance
Despite the overall IT budget reductions over the past two years, additional funds have still been allocated for NIS2 compliance – either from the IT budget or elsewhere within the business.
This constraint may explain why 80% of EMEA IT budgets are now allocated to cybersecurity and compliance by companies required to comply with NIS2. This leaves little room to address IT leaders’ top challenges, such as the skills gap, profitability, and digital transformation.
“Maintaining security and compliance is vital for any organisation, but the fact that it currently consumes most of the IT budget highlights how underprepared and under-resourced organizations are,” says Andre Troskie, field chief information security officer: EMEA at Veeam. “IT leaders have limited budgets, yet still need to find the resources to meet NIS2 requirements quickly.
“Those who adopt a holistic approach to security and best practices before legislation mandates them will naturally face less pressure, allowing them to better address other key priorities and challenges.”
UK leads in NIS2 investment and confidence
Despite NIS2 not directly affecting UK companies, those that do business with EU entities must comply, and their responses paint a different picture.
The UK was the only country surveyed to report an increase in IT budgets since January 2023, with 62% of UK-based IT decision-makers reporting a budget increase and just 14% seeing a decrease. This has enabled UK businesses to invest more heavily in improving their security posture ahead of the directive.
Thirty-eight percent of UK-based respondents have already invested in reviewing cybersecurity processes and best practices, and 34% have invested in new technologies, which are higher figures than reported by their EU counterparts.
UK IT decision-makers also plan to continue significant investments going forward, with 30% intending to further review cybersecurity processes and best practices, and 25% planning new technology investments, compared to an average of 15% and 16% across other surveyed countries.
Dan Middleton, regional vice-president of the UK and & Ireland at Veeam, comments: “Given their readiness to invest and improve, it’s unsurprising that 90% of UK IT decision-makers feel confident in their ability to comply with regulatory requirements – the highest confidence in EMEA. This is good news ahead of the upcoming Cyber Security and Resilience Bill.
“While the details are yet to be released, any moves UK businesses make now to enhance their cyber and data resilience will benefit them when this regulation comes into force. This includes the planned investment by over one-third (36%) of UK respondents in upskilling existing employees, which will help tackle the growing skills gap, an issue putting a third (30%) of UK businesses under more pressure than any other common IT challenge.”