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IT spending now expected to decline 5.1% in face of pandemic
Spending on PCs and mobile devices in 2020 is expected to take the biggest hit, according to analyst firm IDC -- but spending on IT infrastructure will rise.
IDC recently further revised its worldwide IT spending forecast for 2020, from an earlier projection of a 2.7% decrease in constant currency to a 5.1% decrease due to the COVID-19 pandemic. In February, IDC had predicted a 5% increase in worldwide IT spending.
Despite the drop to a projected $2.25 trillion in spending, IT infrastructure spending is still expected to rise by almost 4%. Analysts see other reasons to be optimistic.
"In the long term, this won't disrupt the general trend toward digital transformation -- in fact, it might just accelerate it," said Stephen Minton, program vice president of customer insights and analysis at IDC. "The crisis will likely provide us with proof points which show that companies that were further along the road with things like cloud adoption and digital transformation in general were best positioned to withstand this kind of event."
Businesses also have to be careful about their business continuity plans and how they proceed with making cuts and how they look at this unique situation in a long-term lens.
"[Businesses] have to get a handle on [their spending and budgeting]. They need to know where they are and they also need to know, assess and come up with scenarios for where the potential for growth is, vs. contraction," said Howard Dresner, founder and chief research officer at Dresner Advisory Services. "You know where you should be investing, because if you can do across-the-board cuts, you're cutting your growth business, too."
Double-digit decrease in device spending
Devices will be hardest hit, with companies spending 12.4% less on PCs and mobile devices in 2020. Companies were planning to reduce spending on PCs due to last year's commercial refresh cycle, but mobile devices were expected to see a boost with the impending launches of 5G service and products.
Minton said there is a chance that companies may spend more on devices, however, given the rise in work-from-home initiatives due to shelter-in-place orders.
Stephen MintonProgram vice president, IDC
"There could be some cuts in spending on mobile devices and apps, for example, because people are not currently very mobile," Minton said. "On the other hand, there's a lot of crossover between mobile and working from home, so it's not a simple equation. Businesses have to evaluate which technologies can help them to not only keep operating during the period of social distancing, but also to come out of the crisis at something like full speed, so cutting too much can be just as damaging as not cutting enough in some cases."
IT infrastructure spending to rise
Although overall IT spending will decrease, infrastructure spending is expected to increase 5.3% this year, mainly due to enterprise spending on infrastructure-as-a-service projects.
"The most long-term impact is probably going to be that this will be a tipping point for cloud, which sees a lot of the laggards finally embrace off-premise public and hybrid cloud services, and begin to scale back or even close down their own data centers and server rooms," Minton said.
This comes after a strong fourth quarter in 2019 that brought in $14.9 billion in spending for cloud infrastructure, after two consecutive quarters of steady decrease.
IT conferences and events affecting spending
Although technology conferences worldwide have either been canceled out of precaution for attendees, been postponed or gone digital, Minton said they won't directly affect projected IT spending. The results of the upended conference calendar may be seen down the line, however.
"It impacts the launch of new products and the general process of evaluating and comparing new technologies," Minton said. "The lack of face-to-face contact in general will have a chilling effect on things like new projects and buying decisions."
A recent Gartner report, "Addressing Disruptions to Tradeshow and Event Marketing Plans Due to Coronavirus (COVID-19)," contingency plans can help minimize the effects that COVID-19 has had on tech events and conferences. The report found that 11% of their marketing budget is pushed on third-party tradeshows and Gartner recommends companies reallocate their budgets in case of these cancellations.