Customers set to ‘abandon’ IT projects to cut costs

Customers set to ‘abandon’ IT projects to cut costs

Short-term focus on saving, not spending

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Companies will axe IT projects throughout the remainder of 2020 and into 2021 as the recession caused by Covid-19 starts to bite.

According to GlobalData findings - Covid-19 Impact on IT infrastructure Equipment - there will be a long-term need for IT infrastructure such as data centres, cloud IT and networking to support changing business practices, but companies’ short-term focus will be on saving, not spending.

Despite a positive long-term picture for IT infrastructure spending, the immediate future looks bleak. Companies will aggressively cut costs throughout the remainder of 2020 and into 2021.

IT projects will be axed and adoption of some technologies – such as edge computing and Internet of Things – will be slower than expected.

The speed with which Covid-19 became a major international crisis took entire populations, governments and businesses by surprise. The enforced move to working from home immediately put IT infrastructure under significant pressure.

Despite uncertainty over whether it could support remote working at scale, IT infrastructure coped well in the first stage of the crisis. However, with countries only coming out of lockdown in stages, there will be a long-term need for IT infrastructure to support changing business practices.

That favours companies such as Amazon Web Services, Microsoft, and Google, which are highly ranked in the thematic screen of GlobalData’s IT infrastructure equipment sector scorecard.

Credit: GlobalData

Although IT infrastructure has so far survived the Covid-19 test, customers and vendors should carry out a post-pandemic review to identify and correct any infrastructure failings. The risk is that, with all companies in survival mode, any necessary fixes will be forgotten until the next crisis comes along.

Vendors may want customers to adhere to a lifecycle of planned retirements and upgrades but, in the aftermath of Covid-19, customers will cut costs and rely on what they have. Any vendors whose supply chains were overly reliant on China should take steps to minimise future disruption by adopting a multi-location approach.”

David Bicknell is a principal analyst at GlobalData

Tags NetworkingGlobalData

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