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Cloud and cybersecurity, initiatives that heavily occupied the typical IT department in 2020, are topping tech managers' to-do lists this year.
Senior IT decision-makers polled by Enterprise Strategy Group (ESG), a market research firm based in Milford, Mass., and a division of TechTarget, cited public cloud infrastructure services and cybersecurity as their No. 1 and No. 2 investment priorities for 2021.
Sixty-eight percent of respondents said they planned to increase public cloud infrastructure spending this year, while 66% identified cybersecurity as an area where they planned to commit more budget. Public cloud applications tied for third with AI and machine learning (ML), with 63% of IT managers flagging those technologies for higher spending levels.
ESG's findings mark a reordering from the research company's 2020 spending intentions survey, which ranked AI and ML as the top priority (64%), followed by cybersecurity (62%), public cloud infrastructure services (58%) and public cloud applications (54%). The latest ESG report surveyed 664 managers at organizations in North America and Western Europe with 100 or more employees.
The COVID-19 pandemic appears to have influenced the reshuffling, as organizations accelerate cloud adoption and ramp up cybersecurity to protect cloud-based assets and shield remote workforces. More than half of the survey's respondents said they are spending more to "implement long-term technology strategies" that provide greater flexibility and resilience to deal with future business disruptions, according to ESG.
Overall, the pandemic is contributing to an increased level of IT spending in 2021. Sixty percent of senior IT managers expect their organizations to boost spending in 2021, with 35% projecting investment to remain at 2020 levels and 4% anticipating a decrease in spending.
Cloud, cybersecurity in the spotlight
Cloud adoption has nearly doubled over the past five years, according to ESG's tracking data. The company said 78% of organizations will use infrastructure as a service in 2021, compared with 42% in 2017. In addition, 45% of ESG respondents said they have adopted cloud-first policies, meaning they deploy new applications in the cloud unless there's a compelling case for in-house implementation. As for applications still residing on premises, respondents said nearly eight out of 10 are destined to move to the cloud. Eighty-five percent of those polled said their organizations have slightly or significantly accelerated the number of the remaining on-premises applications and workloads considered cloud candidates.
Growing cloud adoption, meanwhile, colors organizations' cybersecurity priorities. Senior IT decision-makers pointed to cloud infrastructure security and cloud application security as their top cybersecurity spending priorities in 2021, ESG noted.
Ron Dupler, CEO of GreenPages, a hybrid cloud services provider and systems integrator based in Kittery, Maine, said ESG's findings track with his company's views on the current market. "When we look at what we do, we are laser-focused on cloud and security at the heart of our message," he said.
The secure cloud concept is central to the IT transformation underway among customers, Dupler added. "Secure cloud is the main theme for 2021," he said.
Cybersecurity, in general, is increasingly viewed as a pivotal business consideration -- a contrast to previous years when it struggled to become a key component of business culture. In ESG's survey, 47% of respondents considered strengthening cybersecurity a business issue that drives tech spending. That compares with 40% who identified cybersecurity as such in ESG's 2020 poll.
The change in thinking began well before 2020, however.
Bill LundellDirector of syndicated research, Enterprise Strategy Group
"We've actually seen that shift -- in terms of business executives and even corporate boards getting more hands-on with cybersecurity -- take place over the last several years, really starting on the heels of the Sony breach that came to light in late 2014, early 2015," said Bill Lundell, director of syndicated research at ESG. "But we certainly saw renewed, reinvigorated business-side interest in and oversight of cyber issues due to the giant pivot to work-from-home efforts starting in March of 2020."
ESG next month plans to release a study focusing on increased C-suite and board-level involvement in cyber operations, which have been shaped through COVID-19's tech effect.
Business services, telcos, life sciences boost spending
A look at spending projections by industry reveals the business services sector as the leading vertical. Seventy-three percent of respondents anticipate year-over-year increases in IT spending, with 27% expecting spending to be flat. The business services sector encompasses accounting, consulting and law firms as well as other professional services providers. The pandemic's work-from-home directives likely play a role in the sector's spending plans.
"Since these are almost exclusively knowledge-worker-based professions, we believe these firms have spent more to enable a higher proportion of remote-enabled employees," said John McKnight, executive vice president of research and analyst services at ESG. "The overall average percentage of employees currently working from home across all organizations surveyed is 54%, which jumps to 68% among those organizations in the business services sector. This was the highest percentage of remote workers of any industry."
Telco and media, life sciences, technology and manufacturing round out the top five sectors regarding IT growth expectations. Some of those markets' spending intersects with the pandemic and the accelerated adoption of the cloud. Life sciences organizations, for example, are moving R&D into the cloud to speed up research and foster collaboration to develop COVID-19 vaccines and therapies.
Other verticals, despite COVID-19's influence on spending, appear further down the list of markets anticipating increased investment. In healthcare, ranked eighth in ESG's research, 54% of respondents expect year-over-year IT spending growth, while 35% anticipate level spending and 11% forecast a decline in spending.
"The trend we've seen in healthcare is that certain pressing areas, such as increases in telemedicine and treating and containing COVID-19, have led to increased technology spending," Lundell said. "But other factors, like decreases in elective surgeries and other health services, have potentially dampened demand in other elements of the industry."
Beyond cloud and cybersecurity, robotic process automation (RPA) also stands out as technology poised to make additional inroads in 2021. Only 2% of the IT managers in ESG's 2020 survey ranked RPA as their No. 1 IT initiative, but that slice jumped to 8% in the 2021 poll. The percentage of respondents using RPA in production settings has also increased since 2020: 16% of the decision-makers surveyed cited significant bot deployment in 2021 compared with 13% in 2020, while those citing limited bot deployment climbed to 22% from 16%.
The pandemic has also helped accelerate digital transformation, a broad business and technology program that may incorporate cloud, security, RPA and other components. Such projects most typically aim to boost operational efficiency and improve collaboration, according to ESG.
Digital transformation is seeing higher degrees of deployment. Half of the ESG survey respondents said they are "currently implementing and executing various digital transformation initiatives," compared with 39% who said so in 2020. In addition, 22% of those polled cited a mature level of digital transformation in which several initiatives have been implemented and optimized.
Data integration and business intelligence, meanwhile, are the most common investment priorities in the field of analytics, ESG's data indicates. Data integration can span a range of activities such as ingesting data, merging data sources, providing unified views of data, cleansing data and transforming data, McKnight explained.