Cybersecurity Budgeting for 2026: Why IAM Should Be at the Center of Your Strategy

In this article

CISOs and CTOs face a pivotal budgeting year. Cybersecurity spend is projected to surge past $240 billion in 2026 (Gartner), driven by new regulations, AI-driven threats, and board-level scrutiny. This article explores why 10-15% of your cybersecurity budget should go to Identity and Access Management (IAM), how IAM anchors Zero Trust initiatives, and the ROI and risk reduction you can defend in front of the board. You’ll also find practical planning steps, metrics to track, and pitfalls to avoid.

Executive Overview

Cybersecurity budgets have shifted from incremental optimization toward targeted growth. Analysts forecast global spend to increase 12.5% in 2026, reaching $240 billion. Within that growth, IAM is an essential category – the backbone of regulatory compliance, cyber insurance eligibility, and modern Zero Trust security architectures. Forrester guidance is clear: leading enterprises now allocate 10–15% of their total cybersecurity budgets to IAM (Forrester).

Why IAM Demands Budget Priority

The attack surface has shifted decisively to identities. 65% of breaches involve identity compromise (IBM), with generative AI and deepfake-enabled fraud escalating the threat (ESG Research). Cyber insurers already mandate multi-factor authentication (MFA) and robust access governance before underwriting policies.

Organizations that invest strategically in IAM also see measurable financial impact: IBM’s Cost of a Data Breach Report 2024 found that enterprises with strong IAM programs saved an average of $1.76 million per breach compared to peers without adequate identity controls (IBM).

Budget Breakdown: Where IAM Fits

Before breaking down IAM’s share, it’s useful to understand the overall spending landscape. Typical 2026 enterprise security budgets look like this (Elisity):

• Software/Security Tools: ~40%
• Internal Personnel: ~30%
• Other Services/Infrastructure: ~30%

IAM falls squarely within the software and services share, commanding 10–15% of total spend. This covers:

• MFA and passwordless authentication
• Privileged Access Management (PAM)
• Identity Governance and Administration (IGA)
• Single Sign-On (SSO)
• Lifecycle automation and compliance reporting

This spend is not only defensive. Integrated IAM platforms streamline user experience and support business agility. Both are critical outcomes boards want to see linked to cybersecurity investment.

IAM as a Zero Trust Pillar

Zero Trust frameworks distribute investment across several categories: network segmentation, device security, data protection, application security, and identity. Among these, IAM stands as the largest or equal-largest allocation:

• Identity & Access: 10–15%
• Device Security: ~15%
• Network Segmentation: 15–20%
• Application Security: ~10%
• Data Protection: 5–10% (Forrester)

Identity is the “control plane” for Zero Trust. Without mature IAM, the rest of the framework collapses.

Defending Your IAM Budget in 2026

When presenting to boards or executive committees, CISOs and CTOs should anchor IAM funding in three defensible arguments:

1. Risk Reduction: Demonstrate how IAM reduces breach likelihood and cost exposure.
2. Regulatory Compliance: Highlight alignment with EU DORA, NIS2, HIPAA and similar mandates.
3. Insurance & Financial Impact: Show how IAM investment directly lowers premiums and insurability risk.

The message is clear: IAM is no longer a cost center—it’s an enabler of financial resilience.

Check out our article “Quantifying the ROI of Your IAM Strategy” for further details.

Practical Planning Steps

Here are some practical steps security leaders can take to operationalize IAM budgeting in 2026:

• Integrate IAM into risk and maturity assessments early in the budget cycle.
• Prioritize integration-ready solutions that reduce technical debt and scale across cloud, SaaS, and hybrid environments.
• Track outcomes with metrics such as identity-related incident reduction, improved compliance audit scores, and cyber insurance readiness.

Pitfalls to Avoid

• Underfunding IAM relative to its risk profile.
• Treating compliance as the end goal. Checkbox IAM does not address real-world attack vectors.
• Buying technology without matching process and personnel readiness. Identity programs fail when they lack operational ownership.

Final Thoughts

2026 is the year IAM budgeting must become a board-level conversation. The numbers speak for themselves: identity is the most exploited attack vector, and IAM the most direct path to quantifiable risk reduction.

CISOs who allocate and defend 10-15% of their budgets for IAM will not only reduce breach exposure and regulatory penalties but also build resilience and trust – the true currency of business in the digital age.