Companies Will Abandon IT Projects to Cut Costs into 2021, says GlobalData
25 May, 2020
Companies will axe IT projects throughout the remainder of 2020 and into 2021 as the recession bites, says GlobalData, a leading data and analytics company.
The company’s latest report, ‘COVID-19 Impact on IT infrastructure Equipment’, reveals that there will be a long-term need for IT infrastructure such as data centers, cloud IT and networking to support changing business practices, but companies’ short-term focus will be on saving, not spending.
David Bicknell, Principal Analyst in the Thematic Research Team at GlobalData, comments: “Despite a positive long-term picture for IT infrastructure spending, the immediate future looks bleak. Companies will aggressively cut costs throughout the remainder of 2020 and into 2021. IT projects will be axed and adoption of some technologies – such as edge computing and Internet of Things – will be slower than expected.”
The speed with which COVID-19 became a major international crisis took entire populations, governments and businesses by surprise. The enforced move to working from home immediately put IT infrastructure under significant pressure. Despite uncertainty over whether it could support remote working at scale, IT infrastructure coped well in the first stage of the crisis. However, with countries only coming out of lockdown in stages, there will be a long-term need for IT infrastructure to support changing business practices. That favours companies such as Amazon, Microsoft, and Google, which are highly ranked in the thematic screen of GlobalData’s IT infrastructure equipment sector scorecard.
Bicknell continued: “Although IT infrastructure has so far survived the COVID-19 test, customers and vendors should carry out a post-pandemic review to identify and correct any infrastructure failings. The risk is that, with all companies in survival mode, any necessary fixes will be forgotten until the next crisis comes along. Vendors may want customers to adhere to a lifecycle of planned retirements and upgrades but, in the aftermath of COVID-19, customers will cut costs and rely on what they have. Any vendors whose supply chains were overly reliant on China should take steps to minimize future disruption by adopting a multi-location approach.”
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