COVID-19: Impact on IT organizations

We asked 205 IT leaders who are decision makers for cloud purchasing about the current impact of COVID-19 on their companies and their expectations for the future. These responses were collected between March 17 and March 24. Initial findings show disruption to ongoing projects and increased importance of cloud capabilities in the future.

The impact of COVID-19 on the technology market is coming in waves. The first wave was the disruption caused by the shuttering of key hardware manufacturers in Wuhan province as China grappled with the initial outbreak of the virus in January. The impact was slightly delayed because of inventory levels within the supply chain, but in February and early March major hardware OEMs experienced shortages of key components for their data center infrastructure offerings. Just as those hardware supply chains are beginning to be replenished, the second wave of impact is occurring. As widespread business disruption occurs in Europe and the United States, it will affect customer demand for IT products and services. There is still much uncertainty about exactly how this disruption will play out, but it has caused vendors like Oracle and Microsoft to decrease or widen the range of their 2020 financial guidance. During the third wave of disruption, we expect long-term changes to spending patterns and business strategies.

TBR asked customers about the impact of the second (short-term spending patterns) and third (long-term spending patterns) waves of COVID-19 disruption.

For second-wave impacts, existing projects are slowing and new spending is frozen, but customers are spending to triage urgent COVID-19-related responses:

  • The majority of IT organizations are being impacted by COVID-19, with only 19% of respondents indicating they have not yet experienced changes to IT operations.
  • While 43% of respondents indicated existing projects are being delayed due to social distancing restrictions, companies are opening their wallets to maintain productivity as many employees shift to remote work. About 34% of organizations surveyed have spent on technology related to productivity as a result of the COVID-19 pandemic.
  • Cloud consumption is also up, with 17% of respondents indicating higher cloud usage due to data center component shortages and 10% indicating higher cloud usage due to labor impacts.

In the third wave, cloud delivery will play an even greater role after the COVID-19 outbreak has abated:

  • Disruption to normal business processes has highlighted the importance of having remote access to data, apps and collaboration tools.
  • While all organizations we surveyed are already using cloud technologies, 48% of respondents believe that the COVID-19 pandemic will lead to an increase in their cloud technology usage as part of long-term IT strategies. A lesser amount, 26%, are not expecting changes to long-term IT strategies at this time. The remaining respondents are unsure about the impacts to long-term strategies.

Today, only one thing is certain: uncertainty:

  • At this point, it is too soon to tell what the final impact on IT organizations will be in terms of technology spend and initiatives.
  • Companies are likely to take a wait-and-see approach to better understand impacts to revenue, profit and ultimately budgets before committing to new IT spend.
  • Cloud adoption, collaboration and employee mobility were already major industry trends prior to the COVID-19 pandemic; however, TBR believes the outbreak will accelerate the development of organizations’ business continuity strategies and remote workforce programs going forward.

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