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It is no surprise that IT spending is in decline due to the pandemic, but Gartner believes CIOs must strive to identify new ways IT can add value.
The analyst company has forecast that worldwide IT spending will total $3.5tn (£2.8tn) in 2020, a decline of 7.3% from 2019. Cutting costs and doing more with less, as was the case during the banking crisis of 2008, are unlikely to improve the speed at which businesses can return to profitability.
Gartner sees the pandemic response in three phases – respond, recover, renew – and as organisations enter the “recover” phase they will have a backlog of IT projects and less cash to use for them. As a result, the analyst firm predicts that CIOs will gravitate towards spending on subscription products and cloud services to minimise upfront costs.
Infrastructure as a service (IaaS) is expected to grow by 13.4% to $50.4bn in 2020 and by 27.6% to $64.3bn in 2021. Ongoing workplace collaboration requirements will fuel sustained user spending in cloud-based conferencing, which is projected to increase by 46.7% in 2020, according to Gartner’s latest forecast.
“Organisations cannot return to previous processes that are now rendered outdated due to the disruption of their primary revenue stream during the pandemic,” said John-David Lovelock, distinguished research vice-president at Gartner.
In some industry sectors, such as hospitality and air travel, he said corporations have built up their business models to run at a certain level, but “this has completely changed”.
Recognising that a lot of employees may be laid off, Lovelock said organisations were looking to automate more processes to help people working remotely. This, he said, is because the workflow is very different. “The more we automate, the smoother business runs, and fewer people need recalling.”
The pandemic highlighted weaknesses in global supply chains. Lovelock expects organisations to put a lot of effort into bolstering business continuity to reduce the impact of disruption in supply chains. “Real-time analysis is critically important – what’s coming in and is it being shipped out?” he said.
Given that the majority of office-based workers are working from home, Lovelock said IT leaders would need to industrialise remote working.
Figures from Gartner show that desktop as a service (DaaS) is expected to boom, with growth of 98% predicted in 2020. “DaaS is being pushed because the cloud works really well and scales up and scales out and works regardless of location. DaaS is also inexpensive compared to shipping a new laptop, and you can run it on an old laptop,” said Lovelock.
While the idea of streaming virtual Windows desktops to endpoint devices has been around for a very long time, Lovelock said desktop virtualisation technology has not been a top priority for CIOs. “Very little was done on cost optimisation, but now it is one of the top 10 priorities for CIOs,” he said.
Along with the rise in DaaS, Lovelock said Gartner had tracked a rise in sales of consumer-grade printers, reflecting that people working from home sometimes need to make hard copies of documents. He said there had also been a big jump in spending on monitors.
According to Gartner, ongoing workplace collaboration requirements will fuel sustained user spending in cloud-based conferencing, which is projected to increase by 46.7% in 2020.
Lovelock expected CIOs to budget around $1,000 per employee for home office equipment.
Beyond desktop IT and support for remote workers, Gartner reported a 10.3% decline in datacentre spending, enterprise software spending is forecast to be 5.7% lower, while IT services is set to experience a 6.8% decline in spending. Spending on devices is forecast to reduce by 16.1% in 2020.
Lovelock said some IT projects are being cut, and where money is being invested in new IT, such projects are likely to be smaller.
Read more about IT priorities
- IT decision-makers realise that old applications restrict agility. As organisations digitise processes, application modernisation is key.
- The 2020 IT Priorities Survey from Computer Weekly and TechTarget confirms enterprise datacentres remain the deployment site of choice for many workloads, but stepping up the use of cloud is a top investment plan.