Worldwide IT spending is projected to total $3.4 trillion in 2020, a decline of 8% from 2019, according to the latest forecast by Gartner, Inc.
The coronavirus pandemic and effects of the global economic recession are causing CIOs to prioritize spending on technology and services that are deemed “mission-critical” over initiatives aimed at growth or transformation.
“CIOs have moved into emergency cost optimization which means that investments will be minimized and prioritized on operations that keep the business running, which will be the top priority for most organizations through 2020,” said John-David Lovelock, distinguished research vice president at Gartner.
“Recovery will not follow previous patterns as the forces behind this recession will create both supply side and demand side shocks as the public health, social and commercial restrictions begin to lessen.”
All segments will experience a decline in 2020, with devices and data center systems experiencing the largest drops in spending (see Table 1.)
However, as the COVID-19 pandemic continues to spur remote working, sub segments such as public cloud services (which falls into multiple categories) will be a bright spot in the forecast, growing 19% in 2020.
Cloud-based telephony and messaging and cloud-based conferencing will also see high levels of spending growing 8.9% and 24.3%, respectively.
“In 2020, some longer-term cloud-based transformational projects may be put on hiatus, but the overall cloud spending levels Gartner was projecting for 2023 and 2024 will now be showing up as early as 2022,” said Mr. Lovelock.
“IT spending recovery will be slow through 2020, with the hardest hit industries, such as entertainment, air transport and heavy industry, taking over three years to come back to 2019 IT spending levels,” said Mr. Lovelock.
“Recovery requires a change in mindset for most organizations. There is no bouncing back. There needs to be a reset focused on moving forward.”
Morever, a Gartner, Inc. survey of 172 HR leaders on June 9 found that 52% reported their organization’s business operations are continuing at a reduced level due to the COVID-19 pandemic.
As part of the same survey, 40% of 146 respondents reported optimizing costs as the business priority that has changed the most since January 2020.
“Many organizations have entered the recovery phase and are focused on stabilizing the business and restarting activity,” said Mark Whittle, vice president of advisory in the Gartner HR practice.
To successfully navigate today’s new normal, CHROs and senior HR leaders must address each of these priorities:
1. Future of Work
Leaders need to consider the predictions for what the future of work will look like and assess the likelihood of each trend impacting the organization.
2. Critical Skills and Competency Development
“According to a recent Gartner survey of 113 learning and development leaders, 71% said that more than 40% of their workforce has had to use new skills as a result of changes to work due to COVID-19,” said Mr. Whittle.
3. Organizational Design and Change Management
Gartner research shows that successful change management outcomes require a shift from top down change led by senior leaders and communicated down to employees, to open source change where employees are involved in designing change processes.
4. Employee Experience
The pandemic and fallout has changed the focus of employee experience to sustaining the performance and engagement of a hybrid workforce – some employees working fully remote or partially remote and others at the workplace.
5. Current and Future Leadership
Organizations need resilient leaders more than ever. To foster resilience, HR needs to support leaders at the personal, team and institutional levels.
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