Top 2020 IT priorities hold fast amid COVID-19; spending takes hit

TechTarget’s 2020 IT Priorities Survey was done in late 2019 and early this calendar year, prior to the COVID-19 outbreak grew to become a global pandemic. The unexpected economic downturn induced by the virus has compelled many businesses to minimize their IT budgets from what they initially prepared. But the […]

TechTarget’s 2020 IT Priorities Survey was done in late 2019 and early this calendar year, prior to the COVID-19 outbreak grew to become a global pandemic. The unexpected economic downturn induced by the virus has compelled many businesses to minimize their IT budgets from what they initially prepared. But the prime expending motorists cited by study respondents — network and infrastructure modernization, electronic transformation, cybersecurity and cloud computing — are nevertheless entrance and heart for IT teams amid the pandemic.

If nearly anything, the coronavirus disaster has bolstered the high-level IT priorities identified by the study, based mostly on interviews with CIOs, know-how solutions vendors and IT analysts. With the virus forcing businesses to quickly increase their distant do the job abilities and just take other actions to preserve operations running, the require for new networking and protection systems, cloud-based mostly techniques and improved digitization of company processes is only getting more substantial — even if IT expending needs to be lowered.

That’s the case at O.C. Tanner, an worker recognition and benefits corporation based mostly in Salt Lake Metropolis. “Our priorities have not transformed, but our expending has,” reported Niel Nickolaisen, its senior vice president and CIO.

Niel NickolaisenNiel Nickolaisen

Essential IT initiatives are nevertheless staying thoroughly funded, Nickolaisen reported. 1st and foremost is a new SAP-based mostly worker recognition system that will operate in a hybrid cloud setting and be marketed on a regular membership foundation. O.C. Tanner’s current program is primarily a usually means for company shoppers to purchase awards for workers the new system, which is scheduled for common availability by year’s conclude, contains a suite of SaaS purposes for handling and examining recognition programs. It’s made to rework the company’s revenue product to heart on the software program itself, in accordance to Nickolaisen.

O.C. Tanner is also continuing with two other big tasks: a replacement of its Salesforce CRM program with Microsoft Dynamics 365, and a deployment of Nuxeo’s doc administration software program in position of a mixture of Box and Documentum instruments. Both equally are anticipated to noticeably lower ongoing IT prices, with a projected ROI within just 24 months. 

2020 is the calendar year that all the software modernization and legacy replacement we’ve been doing work on in excess of the very last 5 or six a long time comes jointly. We’re not touching that.
Niel NickolaisenSenior vice president and CIO, O.C. Tanner

“2020 is the calendar year that all the software modernization and legacy replacement we’ve been doing work on in excess of the very last 5 or six a long time comes jointly,” Nickolaisen reported. “We’re not touching that, mainly because we are probably about six months absent from the complete line.”

Cushioning the blow, but not totally

He additional that some company things are serving to to cushion the blow of the economic issues induced by the pandemic. O.C. Tanner is privately held and personal debt-no cost, so it can just take a for a longer period-phrase see than many businesses. It also has a diverse purchaser base in many industries mainly because of that, the revenue declines it’s viewing “have not been dramatic, at least not nevertheless,” he reported.

But the IT department has put some prepared expending on hold, these as discretionary bills for vacation, schooling and food stuff. In addition, the midyear bonuses ordinarily compensated to IT staffers may well be smaller than usual, Nickolaisen reported. He expects complete IT expending in 2020 to be flat with very last year’s level: “Regardless of what improves we had we’ve provided up as cuts.”

In the TechTarget IT Priorities Survey, which was done from November 2019 by means of the to start with week of February, the prime 4 expending motorists stated above were chosen by among 35% and 38% of the two,437 respondents around the world. AI and equipment finding out and deployments of ERP techniques and other company purposes were up coming on the record, at 29% and 26%, respectively.

Top technology initiatives in pre-pandemic IT spending plans for 2020
Best IT expending motorists from TechTarget’s 2020 IT Priorities Survey

The prime priorities from the study align with the kinds of IT tasks that EPAM Techniques Inc.’s company shoppers are most commonly funding in the recent setting: cloud migrations and electronic transformation, distant do the job and productiveness enhancement initiatives.

Jitin AgarwalJitin Agarwal

In many situations, “you’ve obtained a rocket motor at the rear of those people demands” mainly because of the company variations compelled by the virus, reported Jitin Agarwal, vice president of enterprise products and solutions at EPAM, a software program progress and consulting solutions business based mostly in Newtown, Pa. Stability, reliability and scalability upgrades are also vital components to ensure that IT networks and techniques can support far more distant personnel and improved digitization, he additional.

Long lasting IT outcomes from COVID-19

Gartner analyst Paul Proctor likewise sees electronic transformation, cloud adoption and distant do the job all accelerating due to the pandemic — and he thinks that’s probable to have lasting outcomes on IT infrastructures. “A lot of folks who have long gone residence [to do the job] are going to continue to be residence,” he reported. The very same goes for new techniques staying deployed in the cloud rather of on-premises info centers.

In accordance to the IT Priorities Survey, electronic transformation is nevertheless a do the job in development in most providers. Only sixteen% of 1,923 respondents reported their corporation had attained an advanced stage on it, although a merged complete of forty one% reported they were just getting commenced or nevertheless looking into likely venture selections.

Where organizations stand on digital transformation initiatives
Digital transformation position info from TechTarget’s 2020 IT Priorities Survey

When the pandemic presents an impetus to speed up those people endeavours and the other prime IT priorities, the economic calamity ensuing from virus-associated lockdowns and company constraints will limit what many IT departments can shell out this calendar year. In the study, fifty three% of 1,625 respondents reported they anticipated their organization’s IT price range to increase in 2020 vs. very last calendar year, yet another 35% anticipated expending to be flat and 12% expected price range decreases. But those people final results now look sure to be way too optimistic.

Gartner this month predicted that around the world expending on IT in 2020 will slide by eight% calendar year-in excess of-calendar year. IDC has lowered its global IT expending forecast just about every month since January, from a 5.1% increase then to a 5.1% drop at the conclude of April it also outlined a far more pessimistic state of affairs with a nine.5% drop-off.

In early April, Forrester Analysis detailed a few eventualities for U.S. IT expending this calendar year: one particular with a 5.two% lower, one particular with a nine% reduction and a worst-case one particular that it did not quantify. The second state of affairs, which is based mostly on the economic downturn continuing into 2021, now looks far more possible, Forrester analyst Andrew Bartels reported in an April 29 website submit.

A diverse affect on IT departments

But the pandemic’s affect on IT may differ widely in distinctive industries and providers. “It’s a cliché to say, ‘everything under the sunlight,’ but that’s what we are viewing,” reported Ben Niernberg, govt vice president at MNJ Systems, an IT and managed solutions company based mostly in Buffalo Grove, Ill. Some IT tasks are staying pushed out to 2021, other people are staying moved up from then to now and some providers have “put the skids on everything mainly because they just aren’t functioning,” Niernberg reported.

Ben NiernbergBen Niernberg

The most difficult-hit industries on IT expending contain resorts, dining establishments, amusement parks and other purchaser solutions organizations, transportation, manufacturing and retail, IDC analyst Jessica Goepfert reported in a May possibly 7 webcast. At the other conclude of the spectrum, the least-afflicted ones she stated contain governing administration, healthcare, schooling and telecommunications.

In an job interview, Bartels reported many retailers and airways are in survival manner and may well have to put off any big IT tasks that aren’t vital to ongoing company operations. Companies that have not dropped as a great deal company can be far more selective about delaying tasks, although e-commerce providers, telecoms and other businesses with constant or increasing revenue may well pace up their IT expending. “It’s hitting inconsistently, and it’s going to hit inconsistently as we move forward,” he reported.

New IT flight sample for jet maker

For Aerion Supersonic, 2020 IT expending has “transformed noticeably” mainly because of the pandemic, reported Bissell Smith, CIO and govt vice president of enterprise techniques at the corporation, which is acquiring a supersonic jet for company vacation and other industrial utilizes.

Bissell SmithBissell Smith

The company affect of the COVID-19 outbreak is demanding Aerion, based mostly in Reno, Nev., to extend out its over-all expending, IT bundled, Smith reported. Planned implementations of ERP, product demands preparing and manufacturing execution program software program have all been postponed and realigned to a new agenda for the jet progress plan that extends the expected start off day on production of the Aerion AS2.

For now, the corporation is focusing on completing deployments of electronic design and style and product or service lifecycle administration techniques that will support its target of building a electronic twin of every single jet to assist in developing and keeping the planes, which will be tailored for particular person prospective buyers. The relaxation of the techniques architecture will then be deployed in excess of a few a long time, with about a one particular-calendar year delay from the unique agenda, Smith reported. “It’s not adjusting the system. It’s adjusting the execution of the system.”

It’s not adjusting the system. It’s adjusting the execution of the system.
Bissell SmithCIO and govt vice president of enterprise techniques, Aerion Supersonic

Some other vital IT investments are also nevertheless staying designed. Smith reported Aerion already had the infrastructure in position to support doing work from residence but additional Microsoft Teams to assist collaboration by its workers, who have all designed the swap to distant do the job throughout the pandemic.

Aerion executives are now discussing no matter if all workers require to do the job in an office environment campus in the future. “I imagine what COVID-19 will do for us is improve our imagining about doing work jointly and what is genuinely vital, and the actual physical interactions that are genuinely vital,” Smith reported. “And that will push new demands into the company, devoid of query.”

Raj PatilRaj Patil

As CIOs revise their budgets to fund current IT priorities and new pandemic-associated ones although reining in expending, other items that are staying deferred contain upgrades of on-premises networks, servers and storage gadgets and buys of new laptops and landline phones, in accordance to consultants. “Nearly anything that’s discretionary clearly is going on the back again burner suitable now,” reported Raj Patil, CEO and president of Orion Innovation, a know-how solutions business based mostly in Edison, N.J.

A vibrant spot on IT expending: the cloud

Both equally Gartner and IDC assume expending to be down this calendar year in all know-how types except cloud solutions, which they forecast will see double-digit development. IDC analyst Stephen Minton reported in the May possibly 7 webcast that he thinks IaaS expending will increase by virtually thirty%, partly mainly because of new deployments and partly mainly because it’s difficult for buyers to change off current cloud techniques and halt spending regular membership costs on them and the info they hold. “None of that info is going wherever,” he reported.

Other than that, Minton sees likely expending improves only for some particular systems in response to the virus outbreak. For case in point, in an IDC study of IT prospective buyers done this spring, the prime systems cited by the 555 respondents for improved buys mainly because of the pandemic contain teleconferencing, distant entry and finding out, virtual workspaces, cell gadgets and collaboration instruments, adopted by cloud solutions and automation software program.

Niernberg and Patil also pointed to improved desire in systems — these as software program-outlined vast space networks and desktop as a service instruments — that, like cloud solutions, can be purchased by way of subscriptions and budgeted as working bills devoid of demanding significant capital expenditures upfront. Expanding use of the cloud was already driving a shift from Capex to Opex expending, “but this put the pedal to the metallic,” Niernberg reported.

Minton reported enterprise IT need stays fundamentally powerful, and he expects IT expending to rebound once the economy increases. But he cautioned that even IDC’s pessimistic state of affairs is not a worst-case one particular. If the COVID-19 disaster intensifies and calls for new lockdowns, CIOs may well have to even further revise their IT priorities and expending plans, he reported. “That delivers up concerns that I really don’t imagine any of us want to imagine about, but we do have to imagine about.”

At O.C. Tanner, Nickolaisen reported he hasn’t designed any variations to the company’s lengthy-phrase IT plans mainly because he hopes the pandemic’s company affect will be short term. For case in point, a cellphone program update is nevertheless prepared for 2021. But corporation executives will appear at exactly where items stand later this calendar year and see if even further IT expending adjustments are needed.

“I convey to my staff that if the downturn is deep, we’ll have to do something else, or if the downturn is lengthy, we’ll have to do something else,” he reported. “But I really don’t assume that we’ll have to do a great deal far more. At least, that’s the hope.”

Editor at significant David Essex and govt editor Ed Burns also contributed to this story.

Rosa G. Rose

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