IT Budgets and COVID-19

Will the effects of COVID-19 reduce IT budgets in the future, or will the value of IT infrastructure be fully realised, and greater investment be scheduled?

I have researched and written about digital transformation, digital culture and implementing technology or services in an organisation. However, I rarely comment on the budgets of these projects or the feasibility of this for an organisation. IT budgets have a significant role in the technology or services which are implemented in a business.

One of Serviceteam IT’s 2020 survey questions asked the IT Directors, Manager/Heads and Engineers of UK businesses whether there would be an increase or decrease to the IT budget in their organisation over the next two years.

• 39% of respondents answered that their IT budget would remain the same.
• 14% reported there would be an increase in the budget.
• 14% reported that there would be a decrease in the budget.

Gartner’s 2020 predictions are that global IT spending will fall by 8% this year. However, they expects the sales of cloud public services to increase by 19%. Cloud services can include collaboration platforms, productivity platforms or communication platforms. The research firm expects cloud trends to accelerate with telephony and collaboration services also.

Gartner’s general guidance, which may reflect Serviceteam IT’s findings of a reduced budget, is to prioritise operations which would keep the business running rather than new investments. Gartner forecasts that spending in business will not return to normal for 3 years.

However, a PwC survey found that 56% felt technology investments will make the company better in the long run on 11 June 2020. This increased from 49% when this question was asked the same question in early May 2020. This demonstrates there has been a shift in the appreciation of digital platforms in a business, and a potential increase in the amount of money invested in the industry.

Additionally, the same PwC survey found that current tech investments show companies are not giving up on business growth.

“The continued focus on investing in technology for growth rather than cost reductions further signals optimism about where companies are headed post-COVID-19.” PwC

CW Job’s Annual Conference Index revealed that cybersecurity and emerging technology were specialisms needed currently, ahead of the cloud. Additionally, emerging technologies are viewed to be long term solutions to help businesses grow post-COVID.

Overall, there does not seem to be a consensus on what IT infrastructure a budget will go towards. It may be more the case that budgets are not static and change depending on an organisation’s specific needs as the challenges and future impacts of the outbreak of COVID-19 unfold.

The difference between UK, US and global figures for IT investment and business growth could depend on the effects COVID-19 has had geographically or for a digital culture.