Your peers may be placing too much emphasis on their experience handling the COVID-19 crisis over the last three months. The disruptive impact of increased remote work can stimulate spending, but the creative destruction wrought by a recession is nothing to be trifled with.
Everybody (97%) thinks the pandemic has accelerated digital transformation within their organization according to a June 2020 survey of over 2,500 enterprise decision-makers sponsored by Twilio. Almost as many (79%) believe the budget for digital transformation has increased because of COVID-19. But where will that money come from?
IT operations and capital expenses are being cut. As of May 2020, 30% of organizations expect budgets for IT operations to decrease as a result of the pandemic, with only 13% predicting increases according to a report from Avasant Research. A June IDC survey of networking professionals found that more than half of their enterprises have canceled or delayed investments in campus networks, with software-defined WANs also seeing a steep drop. The good news is that since March, spending on network management and unified communications has outpaced those declines.
Short-term outlays to adapt to more remote workers will fade away, with the longer-term impact being on network security and moving more workloads to the cloud. However, over the last ten years, the cloud revolution has really resulted in a more evolutionary diversion of money to IaaS, PaaS, and SaaS.
The top priorities digital transformation are improving the customer experience and increasing business efficiency according to a report sponsored by VMware. If a project is purposefully targeted towards a radical rethink of process and products, then it is transformative. If not, then the respondents in the Twilio survey are mistaking digital transformation for tactical IT spending.
More Analysis & Reading
- New and Upgraded Technologies Compete for Transformation Money: 35% of the Twilio survey believe the COVID-19 crisis has removed reluctance to replace legacy software as a barrier to digital transformation. However, 38% of participants in the VMware survey say upgrading existing technology platforms.
- COVID-19: IT Spending at a Crossroads
- Digital Transformation, IT, and the Rest of the Company
Feature image via Flickr.
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