The worldwide COVID-19 pandemic caused dips in many industries, affecting everything from investments to supply chain as the global population took refuge within the safety of their own homes throughout the majority of 2020.
However, many have noted that 2021 will be different, as numerous vaccines have mushroomed all over the world to kickstart the worldwide economy once more.
This claim can be backed up by a recent report by Gartner which projects an increase in worldwide IT spending by 6.2 percent from 2020, reaching $3.9 trillion in 2021. Last year, IT spending declined by 3.2 percent due to companies placing their expenditures on technology and services that were considered “mission-critical” during the initial stages of the pandemic.
While the speed of digital transformation during 2020 reached superior heights to support shift to remote working, education, and social interactions, it also had a negative touch to IT spending by the end of the year.
“CIOs have a balancing act to perform in 2021 — saving cash and expanding IT,” said John-David Lovelock, research vice president at Gartner. “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. Digital business, led by projects with a short Time to Value, will get more money and board level attention going into 2021,” he added.
With that, 2021 looks to breath life within the IT spending segments across the board.
According to the report by Gartner, enterprise software is expected to have the strongest rebound of 8.8 percent, as remote work environments are expanded and improved. The devices segment will see the second highest growth in 2021 at 8 percent and is projected to reach $705.4 billion in IT spending.
“There are a combination of factors pushing the devices market higher,” said Lovelock. “As countries continue remote education through this year, there will be a demand for tablets and laptops for students. Likewise, enterprises are industrializing remote work for employees as quarantine measures keep employees at home and budget stabilization allows CIOs to reinvest in assets that were sweated in 2020,” he further explained.
The report further highlighted that through 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 involves permanently higher adoption of remote work and digital touchpoints. Gartner forecasts global IT spending related to remote work will total $332.9 billion in 2021, an increase of 4.9 percent from 2020.
“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. Optimization 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,” Lovelock noted.
While multiple COVID-19 vaccines are currently available, governments will continue to intervene to control the virus throughout the year; in parallel, geopolitical factors will also contribute to the generation inhibition of some regions such as Brexit, and the U.S.-China trade war.
Gartner projected that a return to 2019 spending patterns will not occur until 2022, despite many countries’ ability to recover at a much quicker rate. The report added that people-gathering industries, such as restaurants, travel and entertainment, will hover at the bottom long-term.
“COVID-19 has shifted many industries’ techquilibrium,” said 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,” he highlighted.