Digital Transformation Offsets the Negative Effect on IT Spending due to COVID-19.
Gartner forecasts that Worldwide IT spending is projected to total $3.9 trillion in 2021, an increase of 6.2% from 2020. This is a reversal of the decline in spending of 3.2% seen in 2020 as CIOs prioritized spending on “mission-critical” technology and services at the start of the pandemic.
The explosion in digital transformation during 2020 to satisfy remote working, education and new social ‘no contact’ norms has offset the pandemic’s negative effect on IT spending due to lockdowns and social distancing.
“CIOs have a balancing act to perform in 2021 — saving cash and expanding IT,” said John-David Lovelock, Gartner’s Research VP.
“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.”
Although all IT spending segments are forecast to return to growth in 2021, Enterprise software is expected to have the strongest rebound as remote work environments are expanded and improved.
Worldwide IT Spending Forecast (Millions of U.S. Dollars)
Gartner suggest that businesses will be forced to accelerate digital business transformation plans by at least five years to survive in a post-COVID-19 world that involves permanently higher adoption of remote work and digital touchpoints. Global IT spending related to remote work will total $332.9 billion in 2021, an increase of 4.9% from 2020, according to their research.
“COVID-19 has shifted many industries’ techquilibrium,” said Mr. Lovelock.
“Greater levels of digitalization 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.”
Even before the pandemic activereach realised that financing digital transformation, at the speed many organizations required, was going to be one of the biggest challenges for enterprises. This led to activereach creating a pioneering new programme, activeFINANCE, enabling businesses to spread the cost of 1, 3 and 5-year licences via a monthly or quarterly payment plan. This programme allows you to roll in costs of upgrades, renewals, support, consultancy and even hardware into one easy regular payment. VAT payments can also be spread over the length of the project, releasing capital to be deployed elsewhere. Repayments, including any interest, are 100% tax deductible.
Mike Revell, Managing Director of activereach explains;
“Payment plans are a highly tax efficient way to accelerate projects. Services used over the life of the project, are paid for over the life of the project. The benefits to cashflow, whilst still enabling IT investment, enhances business results and boosts your ability to drive digital transformation in the post-COVID business landscape.”