Way back in January of 2020, before most of the world had felt the impact of the Covid-19 crisis, Gartner released a report forecasting a 3.4% increase in global IT spending from 2019, totaling approximately $3.9 trillion.
It should come at no surprise that Gartner has just released an updated forecast that paints a far more frugal picture. The 8% spending drop expected in 2020 is an 11.4% decrease from original projections. CIOs, it seems, are counting pennies just like everybody else.
“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,” said John-David Lovelock, distinguished research vice president at Gartner.
With uncertainty the only certainty, we explore how CIOs are making strategic purchases and prioritizing IT investments for 2020.
What Areas Are Hit Hardest By IT Spending Drop?
While every IT segment will see a decline, none is hit harder than device purchases (-15.5%) and data center systems (-9.7%). This shouldn’t be surprising. IT departments can easily patch or update devices to provide basic functionality. In addition, the switch to remote work means many employees are using personal devices.
Device purchases are also short-term, non-strategic purchases. On the other hand, data center systems are much larger investments with strategic planning prior to purchase. The IT spending drop here can be correlated with the expected increase in cloud spending in the next several years.
Where Are CIOs Investing IT Spend?
Gartner’s primary segments (see Table 1) all anticipate decline; however, many sub-segments are seeing enormous growth, in part due to the rise of remote working. Sub-segments such as public cloud services, cloud-based telephony and messaging, and cloud-based conferencing are expected to grow 19%, 8.9%, and 24.3%, respectively.
This decision is strategic. By focusing on use-base cost models or subscription-based cost models, businesses can offload some of the increased uncertainty risk.
How CIOs Can Make Smart Cost Optimization Solutions
Right now, CIOs and IT leaders are tasked with reducing spend and hardening business resilience and disaster recovery programming. While many may feel a sense of frustration (and maybe are muttering “I told you so” under their breath), most are ready for the challenge of making smart cost optimization solutions in response to Covid-19.
Investing In Cloud-Based Solutions
The march towards cloud computing has hastened in the last several years, and the disruption to traditional technology and business workflows caused by the coronavirus will only quicken its step. Cloud-based computing models reduce risk to the organization, offer improved cybersecurity protections (when implemented properly), and offer increased functionality.
Putting DR and Security Front & Center
We recently reported that almost half of all businesses have reported a cyberattack or data breach since the Covid-19 outbreak. With reduced resources and wary CIOs, businesses will engage in more protective, proactive planning – at least those that survive the initial disruptions.
A Trusted IT Services Partner
With the onslaught of challenges, organizations working with strategic IT MSPs will be more resilient to security, service, and funding disruptions. An informed partner will have additional resources most organizations cannot retain in-house and has a vast array of industry insight to help strengthen the business moving forward.
If The IT Spending Drop Is Affecting You, We Want To Help
Mindsight has almost 20 years of IT managed services experience, and as the crisis unfolds around us, we are doing what we can to help. From finding free or reduced-cost solutions to supporting remote work deployments, cybersecurity controls, and cloud migrations, our team of engineers is ready to help you build a resilient IT strategy.
Talk to a Mindsight engineer today.
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About The Authors
Eric White is Chief Technology Officer and VP of Consulting Services at Mindsight. With over ten years of experience in information technology and leadership, Eric excels at implementing network and data center technologies, designing high-yield solutions for the business. Holding professional certifications from Microsoft, VMware, and EMC, as well as the Cisco CCNP, Eric is an expert at solving business realities with a client-centric focus that delivers.
Siobhan Climer writes about technology trends in education, healthcare, and business. With over a decade of experience communicating complex concepts around everything from cybersecurity to neuroscience, Siobhan is an expert at breaking down technical and scientific principles so that everyone takes away valuable insights. When she’s not writing tech, she’s reading and writing fantasy, hiking, and exploring the world with her twin daughters. Find her on twitter @techtalksio.