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As IT spends drop, what does this mean for business?

Written by Zoe Price on Wednesday, 20 January 2021. Posted in Technology

Every business has been impacted by the COVID-19 pandemic, whether that’s for better or for worse. The IT sector is one area that hasn’t particularly thrived throughout 2020, with forecasts suggesting a significant decline compared to 2019.

As IT spends drop, what does this mean for business?

Every business has been impacted by the COVID-19 pandemic, whether that’s for better or for worse. The IT sector is one area that hasn’t particularly thrived throughout 2020, with forecasts suggesting a significant decline compared to 2019.

With IT spending reduced to counteract the impacts of the pandemic, questions have been raised over what effect this will have on businesses moving forward. These are the answers that have surfaced so far.

Cheaper services are the new essentials

When you have less money to spend, you have to get creative with what you spend it on. Cost-effective solutions are the only way to survive with funds being as tight as they are right now. When it comes to IT services, that means a lot of CIOs will be focusing their attention on the more affordable avenues. Cloud services and subscription products generally have lower upfront costs, meaning they’re the best places for businesses to invest their money for the time being.

Conversely, areas like devices and data centre systems will see a stark decline in spending while the pandemic rages on. Although the former saw a spike in the early days of the virus, the need for new devices has plummeted significantly since then due to their costs. Meanwhile, the latter has seen a delay in 60% of data centre construction projects due to their hefty price tags. Data centre growth isn’t essential for keeping businesses alive right now, so these projects won’t resume until funding improves again.

The digital future is here

Digital services are something that have been available for years now. However, it wasn’t until 2020 that a lot of businesses really began to take full advantage of them. Some of them only still exist because they transferred the products and services they used to provide in-person onto the internet. It’s helped save some industries from irreversible decline, and it’s prompted CIOs to rethink their digital strategy moving forward.

Companies who were perhaps reluctant to go all-in on digital now can’t thrive without having an online space. This is partly because it’s where the money is, but also because their previous processes have now become outdated. The pandemic has made sure of that, meaning that the primary revenue stream for many enterprises has to come from digital sources.

Cybersecurity remains a constant requirement 

One area that’s remained fairly consistent in 2020 is cybersecurity. The average IT security budget is higher than it was in the previous year, both for small businesses and for enterprises. The likelihood for this is the realisation that with more people going digital than ever before, the internet has become a potentially dangerous place. Cybersecurity is as big a priority as ever, and so companies should only expect funding for this to grow, despite a decline in the overall IT budget.

London-based businesses who might be concerned about their own cybersecurity in these trying times can find help in the form of Totality Services. They include security management such as encryptions, anti-virus software, and network audits as part of their package, with the company available to you 24/7/365. If you need an efficient and affordable IT support company in London, they’re the people to rely on.

Remote working is the focus

The cheaper costs aren’t the only reason that cloud services have thrived in the face of IT budget cuts. Millions of workers have moved from offices to their homes in 2020 as the pandemic has kept them locked down. While some businesses were already prepared for eventualities like this, many had to adjust quickly to ensure they could continue running efficiently.

For the most part, this transition to remote working has been a success, and it’s prompted many businesses to change their plans for the future. A significant proportion of them now aim to retain this work structure post-pandemic, which means they’ll continue to invest in technologies that can make that happen. Therefore, the growth in cloud services will likely exceed initial expectations for both 2020 and beyond.

It won’t be forever

Despite a projected growth of -7.3% for worldwide IT spending, the future isn’t as bleak as some businesses may have feared for this sector. While the global economy may be predicted a slow and steady incline, there’s hope that IT will bounce back far quicker Estimated spending for 2021, although still lower than in 2019, is expected to increase in many areas.

Understandably, it won’t be a smooth transition out of 2020 for every industry and region. Some places may find that spending doesn’t increase significantly, if at all, and will have to continue doing what they already are to stay afloat. However, on a global scale, the situation will definitely be a more positive one that should restore growth to the IT sector once again.

The pandemic doesn’t have a stop button, so it’s impossible to know for sure when things will start to turn around. However, it's clear to see that although IT spending has been affected by the events of 2020, businesses have adapted well to that, and will continue to do so moving forward.

About the Author

Zoe Price

Zoe has written and researched articles for a wide variety of business websites, blogs and magazines and has a strong understanding of the current trends and a passion for marketing!

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