The Changing Role of the CIO in a Post-COVID World
CIOs in 2019 were already warned that IT budgeting for 2020 would be challenging due to several issues like the US-China Trade War or Brexit. The challenge has been compounded by the COVID-19 pandemic.
The UN Department of Economics and Social Affairs have projected that COVID-19 may cut global economic output by $8.5 trillion over the next two years. They also estimate that, “GDP growth in developed economies may plunge to -5.0% in 2020. A modest, 3.4% growth — barely enough to make up for lost output — is expected in 2021. World trade is forecast to contract by nearly 15% in 2020 amid sharply reduced global demand and disruptions in global supply chains.” COVID-19 has unhinged just about every industry across the globe and technology is no exception.
IT Leaders Need To Shift Their Focus
In the face of this challenge, companies are choosing to shift their short and medium-term priorities. This move is evident through changing demand across different IT categories, with significant variation across industries.
Cutting down on IT capital expenditures has taken on significant importance during the pandemic. A recent report by Gartner estimates that worldwide IT spend will total $3.5 trillion in 2020, which amounts to a 7.3% decline from 2019. However, spend on devices are expected to be hit worse with a decline of 16.1%, followed by data center systems, where there might be a 10.3% decline. With declining revenues, several companies have paused deployments of new technology and many have postponed upgrading existing hardware, delaying feature add-ons or upgrades to existing software. Even businesses that are not taking a considerable hit from this crisis are being extra cautious and pulling back.
However, as countries start reopening and governments ease lockdowns, many businesses will restart operations, reallocate budgets and plan to restore a scalable business. IT leaders may increasingly see fit to migrate to subscription-based products and cloud services to cut down on upfront costs.
Invest In The Right Technologies
During times of crisis, it has often been observed that firms that had invested in digital technologies and training have fared relatively better. A digital-first approach is high priority now and is expected to remain so for quite some time, for example, tools and solutions that aid remote working. Several enterprises expect that migrating apps to the cloud will be of prime importance over the next two years.
Growing investment is also observed in other solution categories that aid remote working. Security, compliance, communication and collaboration tools are a few examples. Security has been of paramount importance with remote working and VPNs not being able to support larger networks. IT organizations are allocating large chunks of their budget to making security airtight for remote-working employees. Other collaboration tools, such as employee monitoring solutions and apps for increasing employee productivity are sound investments in the new normal.
Another major area of investment seems to be sales and marketing. Customers are wary about signing newer suppliers, primarily due to the difficulty in engaging with suppliers and the discomfort of signing large contracts without personal engagement. This has prompted suppliers to adopt digital selling channels, invest on customer-facing apps and utilize digital tools to create visibility across the sales process.
The Way Ahead
As companies navigate these challenging times, it is evident that the focus is changing. The relative operational advantage of larger firms over smaller companies may enhance the digital divide. However, even though budgets are contracting, there is still room for investment to prepare for when the economy rebounds.
What’s Your Plan for Procurement and Supply Chain?
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