In 2020, businesses will execute two distinct technology strategies: during and post-pandemic. The latter will define business success as the economy struggles.
By Naomi Eide
As the number of remote work days turn to weeks, organizations are reconfiguring business continuity plans to adjust for immediate demand and long-term technology requirements.
Through the coronavirus pandemic, the technology sector will mostly fare well. Microsoft has maintained a more than $1 trillion market cap, even as the market at large tanked. Demand for cloud-based services continues and while uptime is tested and bandwidth taxed, normal back office operations can continue.
In 2020, businesses will execute two distinct technology strategies: During and post-pandemic. The latter will define business success as competitors crumble.
Short-term, industry is seeing a spike in cloud-based services, particularly in collaboration and education technology, Stuart Ravens, chief analyst at Thematic Research, told CIO Dive. But with increased threat vectors as work moves home, "cybersecurity will do the best out of all of this."
If response in China is any indication, business will face disruption for about three months. The economic turmoil indicates a recession ahead, though economists are waiting to see if it takes a U- or V-shape. Layoffs cross industry verticals; Department of Labor received 3.3 million unemployment insurance claims for the week ending March 21, an increase of 3 million over the previous week.
Businesses are already introducing cost containment measures, which impacts IT projects and new spending, to protect 2020 revenues.
It's too early to see how large the impact will be, but during a recession what happens is "all IT projects” are put on hold, Ravens said. That's why IT services are hit hardest in the technology space. "2020 is just going to be really unpleasant for IT now."
Large organizations' digital transformation projects, while imperative, will "slow, and slow significantly,” Ravens said.
Long-term, companies will focus on resiliency and hardening against similar shocks in the future. Many businesses were caught unprepared, and savvy leaders will ensure it doesn't happen again.
Containing risk becomes the priority. Businesses don't want to invest in capital-intensive, moonshot projects — think artificial intelligence and blockchain. Unless it can payoff in the near-term, companies are going to shelve it.
Companies are going to slash budgets to bare essential at least in the short- and medium-term, Ed Thomas, research director at Thematic Research told CIO Dive. Money to do thorough digital transformation projects will require board approval.
Keeping lights on will be the core focus, Thomas said.
But IT spending won't stop altogether. Some projects are worth accelerating amid uncertainty.
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