How IT spending has changed during Covid-19

4 Min Read | September 01, 2020

Today’s blog has been adapted from a recent article in Cloud Tech.

The Covid-19 pandemic has to date killed more than 700,000 people while unleashing the deepest economic recession since the Second World War. The World Bank forecasts the global economy will register a negative growth of 5.2% in 2020, disrupting the livelihoods of millions of global citizens.

The pandemic has also brought profound changes for information technology (IT) teams, which have had to play a crucial role in helping their organizations embrace distributed work, launch new digital products and services, and ensure business-as-usual in the light of global lockdowns. How do IT leaders make the right investments that will protect and deliver revenues in an era of social distancing while preparing for eventual recovery and growth?

Here are three takeaways from recent surveys on enterprise IT spending during Covid-19:

  1. Automation, collaboration, and cybersecurity remain key priorities. Sapphire Ventures’ The Impact of COVID-19 on Enterprise Innovation report surveyed 110 CIOs and VPs of IT to understand their current spending priorities. Here are the highlights:
      • A majority (86%) of CIOs expect to either increase or maintain their current levels of IT spending, with a focus on automation that can reduce repetitive work, collaboration tools to help remote workers stay productive, and cybersecurity that promotes enterprise resilience and minimizes the risk of large-scale data breaches.
      • In response to the pandemic, CIOs cited customer-facing capabilities, such as ecommerce, sales, and service as top initiatives.
      • Digital transformation is a board-level priority, with 64% of IT executives planning to either grow or preserve their current levels of digitization investments. More than half (51%) of CIOs expect the number of IT staff to increase by 2021.
  2. Cloud computing takes off. We’ve been hearing from multiple sources that IT leaders are thinking more aggressively about scaling cloud resources for flexibility and agility during this time of disruption. IDG’s 2020 Cloud Computing Survey of 550 IT decision makers found that enterprises will invest 32% of their total IT budgets on cloud infrastructure and applications next year. Other findings from the survey include:
      • In 2020, IT teams will spend an average of $74 million on cloud computing, a solid growth of 59% over 2018.
      • IT teams are either deploying or in the process of migrating a broad range of applications such as websites (53%), collaboration solutions (52%), storage and backup (42%), and line of business services (41%) such as CRM and ERP to public cloud infrastructure.
  3. Balancing cost-cutting with innovation. Apptio’s recent survey shows significant pressure on IT departments to reduce overall technology budgets:
      • IT leaders are cutting travel expenses (82%), delaying projects (72%), and freezing hiring (66%) to optimize spending.
      • While CIOs need to contain costs and ensure clear value from technology investments, there’s strong demand for new IT capabilities. A majority (63%) of respondents are being asked to deliver more with less, a clear indication of how critical technology remains in addressing customer demands in a volatile economy.

Sapphire Venture’s annual CIO Summit is taking place virtually, September 22-25. The event will explore how enterprises are building for the Next Normal as they look to the remainder of 2020 and beyond.

Business execs are looking for answers and directions from IT, more than ever before. IT leaders will need to become active participants in their organization’s response to Covid-19. This will involve collaborating with stakeholders to create new business models, working with HR teams to reimagine the way work is performed, and ensuring organizational resilience with the right technological capabilities.

Next Steps:

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