Philip Carnelley
Philip Carnelley (Associate Vice President)
Erica Spinoni
Erica Spinoni (Senior Research Analyst, European Customer Insights & Analysis)

The Covid-19 pandemic is having a profound impact on the global economy, and IDC has devoted many resources to understanding and forecasting its impact on IT markets now and for the future and advising companies on how they should respond.

Why your COVID-19 response will define your reputation for the next decade

IDC analyses the rapidly evolving economic forecasts and works with our European CIO and digital executive advisory boards to understand the drivers around technology spend in Europe, alongside regular Europe-wide surveys of IT buyer sentiment. Most European organizations expect a revenue decrease in 2020, of course. This is bringing a sharp focus on ROI from digital investments. 70% of the organizations surveyed in our most recent survey (closed March 26, 2020) reported that technology-led transformation projects are being revised to drive efficiency and ROI. The impact is threefold:

  1. Re-evaluation of investment to assess the possibility of achieving greater efficiencies while reducing costs.
  2. Leveraging existing internal resources and technology investments to cut unnecessary costs – and focusing monetary resources on more critical areas.
  3. Maintaining only those projects the deliver a significant and consistent ROI or projects that secure short-term business continuity. Examples include infrastructure provisioning projects and security to allow remote working, connectivity and collaboration.

The current IT markets situation

Therefore, IDC expects strong downward pressure and indeed negative growth in spending on IT services, software and hardware, not just in 2020, but at least through 2022.

  • Services. The IT services market will be strongly impacted in 2020 and beyond. Project services and business process outsourcing (BPO) will be hit hardest, significantly more than managed and recurring services.
  • Software. We have seen some strong growth in software usage, while other categories have been negatively impacted. A block on developments without short-term ROI will restrict spending on traditional on-premises applications software with heavy investments in resources and complex deployments. But online collaboration and cloud IaaS and PaaS solutions are mission critical right now to allow greater flexibility. Anything that helps with business resilience – such as automation (e.g., RPA) and financial planning and forecasting – will be seen, post-pandemic, as crucial to recovery and ongoing operations. There will be sustained demand for collaboration tools and platforms for remote working, distance learning, telemedicine, collaborative design, and so forth.
  • Security and maintaining SLAs are of heightened importance (see Cybersecurity Challenges in the Time of the New Coronavirus). With increasing numbers of remote workers constantly connected through collaboration tools, the risk of services outages is exponentially increased and network investments on VPNs and others will rise.
  • Hardware. The IT hardware market has been highly impacted, especially for those products requiring parts coming from China, given the disruption of the supply chains. IDC expects to see continued inventory shortage for servers and storage devices. For instance, the ODM market shifted from a situation of oversupply to a shortage crisis, highlighting the complexities of the global supply chain. (For more on this, check out the IDC podcast “Episode 54 – Coronavirus Impact in Europe’s IT Market“).

Three key action vectors

For suppliers, your COVID-19 response will define your reputation and underpin your success for the next decade. The pandemic is accelerating the redefinition of business values. Technology vendors should:

  1. Emphasize financial value to bring a sharp focus on ROI. Help customers to understand financial and business outcomes that an ongoing or a brand-new project can deliver.
  2. Create ecosystem value to accommodate new value chains. Highlight how technology can help to connect the entire value chain, extending the infrastructure with other organizations to continuously deliver optimization across the entire value chain.
  3. Focus on Societal Value to promptly respond with #Coronakindness measures. Understand and act on crisis management capabilities and provide free or freemium solutions to the market to generate customer loyalty for the long term. Helping customers, employees, and society as a whole will shape new internal processes and increase employees’ engagement, employee and customer loyalty, and brand awareness.

To learn more, please contact Philip Carnelley and Erica Spinoni or drop your details in the form on the top right.

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