Gartner: IT budgets shift to mature processes around remote business

IT budgets that were not spent last year are set to drive a rebound in spending in 2021, as CIOs restart digital initiatives put on hold during the pandemic.

Worldwide IT spending is projected to total $3.9tn in 2021, an increase of 6.2% from 2020, according to the latest forecast by Gartner. Worldwide IT spending declined by 3.2% in 2020 as CIOs prioritised spending on technology and services that were deemed “mission-critical” during the first stages of the pandemic.

Spending on devices plummeted by 8.2% in 2020, but is forecast to bounce back by 8% this year. “Device spending is not going away,” said John-David Lovelock, distinguished research vice-president at Gartner. “The dollars spent this year were committed to be spent last year.” The devices segment is projected to reach $705.4bn in IT spending. 

Lovelock said that at the start of the first lockdown, businesses bought ultra-high-end thin and light notebook computers, such as Microsoft Surface and Apple MacBook Air devices, to enable key members of staff to be able to work at home more easily.

But as the pandemic has dragged on, employers have needed to support greater numbers of home workers. This has led to purchases of computer monitors, keyboards and comfy chairs for the home market. “There is now the shift in device spending,” said Lovelock. “It is not just about enabling work tasks at home, but being able to do more of the day-to-day work from home.”

This is the concept of the “everywhere employee”, which recognises the fact that staff like the flexibility of choosing where they work.

“Employees like working from home some of the time,” said Lovelock. “We are halfway through Covid-19. It will be with us for the majority of 2021.”

According to Gartner, the unprecedented speed of digital transformation in 2020 to satisfy remote working, education and new social norms presented lockdowns and social distancing measures as double-edged swords – which has reduced the pandemic’s negative effect on IT spending going into the new year. 

Measures that were put in place earlier in the pandemic to help people collaborate while working from home are now being updated. Lovelock added: “Remote working technology to support workers saw immediate growth in April to June 2020. Now, longer term, we are seeing more industrial processes, such as cloud unified communications.”

If 2021 is to pave the way to new approaches to office work, CIOs will need to assess how to deliver a safe, fulling operational desktop IT environment for people who may not be going into the office regularly. Lovelock believes CIOs will be looking at device management and desktop as a service, which grew by 100% in 2020.

“There are a combination of factors pushing the devices market higher,” he said. “As countries continue remote education through this year, there will be a demand for tablets and laptops for students. Likewise, organisations are industrialising remote work for employees as quarantine measures keep them at home and budget stabilisation allows CIOs to reinvest in assets that were sweated in 2020.”

Lovelock said CIOs should not only consider how to support people doing work tasks at home, adding: “Now it’s about making people productive at home.”

For Lovelock, this will drive technology adoption in areas such as content collaboration platforms, secure connectivity and much broader scope for unified communications to encompass voice, email, chat, conference rooms, meetings and content collaboration.

Through to 2024, businesses will be forced to accelerate digital business transformation plans by at least five years to survive in a post-Covid-19 world that will involve permanently higher adoption of remote work and digital touchpoints. Gartner forecasts that global IT spending related to remote working will total $332.9bn in 2021, an increase of 4.9% from 2020. 

According to Lovelock, companies that had digital business initiatives in place in 2020 were more successful than those that had not completed digitisation.

“Digital business represents the dominant technology trend in late 2020 and early 2021, with areas such as cloud computing, core business applications, security and customer experience at the forefront,” he said. “Optimisation initiatives, such as hyper-automation, will continue and the focus of these projects will remain on returning cash and eliminating work from processes, not just tasks.”

In many ways, the pandemic has been a catalyst for aligning the business with IT. “Covid-19 has brought forward the future, which is digital business,” said Lovelock.

Lockdowns forced business leaders to rethink how to engage with their customers and employees when face-to-face contact is not possible, he said. “Greater levels of digitisation of internal processes, supply chain, customer and partner interactions, and service delivery is coming in 2021, enabling IT to transition from supporting the business to being the business. The biggest change this year will be how IT is financed, not necessarily how much IT is financed.”

Lovelock said Covid-19 had forced business leaders to divert funds from other departments into IT. For example, the need to provide remote working meant that IT received money that had previously been budgeted to building maintenance, which is a significant U-turn in business leaders’ attitude towards IT spending.

“CIOs are getting money from other budgets,” he said. “IT shifts from an expense to a percentage of the cost of goods sold.” In other words, IT is linked directly to the revenue generated by the business.

This also means that the CIO’s role is confirmed as a strategic board adviser, said Lovelock. “CIOs have a balancing act to perform in 2021 – saving cash and expanding IT,” he added. “With the economy returning to a level of certainty, companies are investing in IT in a manner consistent with their expectations for growth, not their current revenue levels.”