Coronavirus pandemic impacts business severely, Organizations struggling to balance revenues and expenditure. Many organizations delaying payments or decided to cost cuts to maintain cashflow. Spending on Data center systems, enterprise software, IT services has seen a downfall. Latest Gartner forecast on spending says, worldwide IT spending is forecasted to total $3.4 trillion in 2020, a drop of 8% from last syear’s spending.
The current crisis is causing the Chief information officer (CIOs) to prioritize spending on technology and IT services that are deemed “mission-critical” over initiatives aimed at growth or transformation.
The decline is across the segments, spending on data center systems declines by 9.7%, spending on enterprise software declines by 6.9%, spending communication services declines by 4.5%, spending on IT services declines by 7.7% and spending on devices declines by 15.5% in 2020. The below chart will help understand the declines in IT spending, segment-wise, and overall from 2019.
|Data Center Systems||211,633||0.7||191,122||-9.7|
All segments will undergo a drop in 2020, with spending on devices and data center systems experiencing the most massive declines in spending. Yet, as coronavirus outbreak and lockdown continues to encourage work from home model, sub-segments such as public cloud services (which declines into multiple categories) will be a spot light, will grow by 19% in 2020. Spending on Cloud-based communication and conferencing solutions grow by 8.9% and 24.3% in 2020.
John-David Lovelock, distinguished research vice president at Gartner, said, “CIOs have moved into emergency cost optimization, which means that investments will be minimized and prioritized on operations that keep the business running, which will be the top priority for most organizations through 2020. Recovery will not follow previous patterns as the forces behind this recession will create both supply-side and demand-side shocks as the public health, social and commercial restrictions begin to lessen.”
Recovery of this downfall on IT spending will be slow throughout 2020. Some industries like entertainment, air transport, and heavy industry affected very severely, and these will take at least 3 years to come back to the 2019 IT spending level. Recovery requires a change in mindset for most organizations. There is no bouncing back. There needs to be a reset focused on moving forward.