IT budgets rebound, fuelling new DX projects

After IT spending came to a standstill in the spring amid economic uncertainty, digital transformation (DX) projects are starting to move forward—in many cases at an accelerated pace—to navigate new go-to-market strategies and manage remote workforces.

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IT budgets rebound fuelling DX projects

In a matter of days, we became Neo at the beginning of The Matrix. We were hooked to a network of machines, living in a virtual world, and our bodies began to atrophy from lack of movement.

In mid-March, when the world went into lockdown because of a global pandemic, work, shopping, entertainment and customer service moved online. Meetings and socializing became virtual; the ‘quarantini’ became a thing.

Paper-based business processes became instantly inadequate and, as many of us started to work remotely, IT infrastructure and security became a lifeline to the office.

In the spring, amidst widespread concern and uncertainty about the economy, organizations were initially conservative in their IT budgeting. In the April CIO COVID-19 Impact Study, for example, 35 per cent of organizations expected their IT budgets to decrease in the following 12 months.

“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,” wrote John-David Lovelock, a distinguished research vice-president at Gartner, back in May. (Of course, there were some bright spots, like cloud-based telephony and cloud-based conferencing.)

But it turns out, as organizations have moved to adapt to the new normal, they’ve also had to undergo rapid digital transformation (DX).

Pandemic accelerates DX efforts

In August, a Deloitte Insight pointed out that: “In discussing the COVID-19 pandemic with senior executives, a recurring theme has been how quickly and severely it has affected organizations, forcing them to respond with extraordinary speed and vigor. ‘Slow, but steady’ doesn’t work, given the dynamics of a pandemic.”

Highlighting this pace of change, one CEO told KPMG in its 2020 CEO Outlook: COVID-19 Special Edition that they’ve “realized the equivalent of three to four years of digital progress in their organization in just three to four months.”

This acceleration is widespread, with 59 per cent of IT decision-makers surveyed for IDG’s CIO Pandemic Business Impact Study, released last month, reporting that the pandemic is accelerating their DX efforts.

More than half (54 per cent) say they’re “adding new technology projects to create a competitive advantage given shifts in their industry due to the pandemic.”

IT spending resumes, fuels DX

Spending priorities: analytics, AI and BPM

It’s not surprising, then, that IT budgets are rebounding. According to the survey, 41 per cent of organizations anticipate their IT budgets will increase in the next 12 months, 35 per cent expect them to remain the same and only 23 per cent anticipate a decrease.

Cost control and expense management remain important, especially with the uncertainty that lies ahead, but technology solutions are proving a necessity in navigating the current environment.

As a result, survey respondents plan to spend more on big data and analytics, business process management, artificial intelligence and mobile applications in the coming months.

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From a CEO perspective, these technologies will fuel top priorities such as digital business/transformation initiatives (36 per cent), improving the remote work experience (36 per cent) and upgrading IT and data security (28 per cent).

IT leaders appear to be becoming more strategic as they move beyond the initial conservative reaction in the spring and increasingly focus on driving business innovation (29 per cent now versus 26 per cent in April) and “developing new go-to-market strategies and technologies” (27 per cent now versus 22 per cent in April).

But the pandemic has also changed how IT pros plan to research and procure new technologies: 40 per cent say they will use online product demos and 39 per cent plan to attend virtual networking events.

It’s a sign of the times—even the tech guys are using more tech.

Images: Eoneren/iStock; atakan/iStock

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