Omdia has just complete the first stage of its annual ICT budget and metrics program. This is primary research study with over 1,700 ICT executives in large and medium enterprises across the world, which explores ICT budget trends and allocation for the coming 18 months. Unsurprisingly, exploring the impact of COVID-19 was a core focus, and with many markets starting to emerge from lockdown conditions or at least past the peak of the first wave, timing was good with executives starting to think about recovery plans.
The study interviews enterprises across 19 industry sectors and a key point to note is that the impact of COVID-19 is by no means uniform. Executives were asked for their expectations of revenue impact of the lockdown for 2020 and for some sectors this was actually very positive. Over 58% of healthcare providers expect higher revenue/budget for 2020 than envisioned at start of year, with relative few expecting a negative effect. While this is somewhat unsurprising given the direct brunt of COVID-19 was focused on healthcare demand, enterprises in other sectors such as media or telecommunications also saw some positive effects with 55% and 47% expecting higher revenue for 2020 respectively. Conversely, executives in other sectors such as construction, transport and logistics, manufacturing, professional services, and retail largely expect a negative impact. Although, the outcome is similarly non-uniform in these sectors, with typically a quarter to a third of enterprises expecting positive revenue. For example, supermarkets on the retail side have generally seen stronger demand as result of lockdown.
As a whole revenue expectations for 2021 are more negative. A significant proportion of enterprises in many sectors still expect an increase in revenue, but this is generally less pervasive than for 2020. For example, in media and telecommunications higher revenue for 2021 is only expected by 45% and 30% of enterprises respectively. The proportion of enterprises expecting negative revenue growth is higher for the year in 2021 than 2020 in nearly all industries (public sector is the main exception). It appears that most executives are envisioning that the result of economic lockdown will be recessionary for 2021, with the market conditions correspondingly tough.
The impact on technology spending is more complicated. There has been a clear impact on technology spend in 2020. In last year’s program (ICT Enterprise Insights launched in 4Q19), over 70% of enterprise were expecting ICT budget growth in 2020. This has dropped to 37%. Within this the proportion expecting strong ICT spend growth has fallen from 37% to 8%. Interestingly, while the share decreasing spend has unsurprisingly grown, the shift is not as dramatic—with a move from 10% at end of last year to 25% now. In the main, there has not been an absolute drop-off in spend.
For 2021, there seems to be polarization of strategy occurring with the number of enterprises strong increasing spend expanding up again (albeit to 13%), with the proportion decrease spend also growing, but with a shift to relatively low (1–5%) over than swinging cuts. Executives expect a bleak 2021, but the fallout on COVID-19 on technology budgets seems largely already felt in 2020.
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