Rebound to pre-pandemic spending levels won’t spread evenly across industries
Many businesses are bolstering videoconferencing and collaboration tools as they lay the groundwork for a permanent shift to hybrid offices combining physical and virtual workspaces. PHOTO: JOE GIDDENS/ZUMA PRESS
Chief information officers and other corporate technology leaders are moving on from stopgap information technology measures deployed during the coronavirus pandemic and eyeing more ambitious projects, according to the latest IT spending forecast by research and consulting firm Gartner Inc.
Companies worldwide are expected to spend $4.1 trillion on IT this year, up 8.4% from 2020 and regaining the pace of corporate IT growth before Covid-19 brought much of the global economy to a standstill, Gartner said.
Many businesses are bolstering videoconferencing and collaboration tools, which helped support remote work during the crisis, as they lay the groundwork for a permanent shift to hybrid offices combining physical and virtual workspaces.
Ramped up spending of more than 10% from last year on both enterprise software and devices is expected to lead the gains, Gartner said.
“Our overall IT budget will look very similar to what it did pre-pandemic,” said Erik Bailey, CIO at Anaqua Inc., noting the Boston-based software company’s spending plans will focus on cybersecurity, hosting services and laptops, monitors and other workstation equipment. The goal is “to ensure staff are completely productive wherever they are,” he said.
At cybersecurity and network services provider Akamai Technologies Inc., this year’s IT budget includes spending on technologies that support enhanced security, mobility and collaboration, while “continuing our commitment to cloud migration and other key projects,” Mani Sundaram, CIO executive vice president, said.
Most businesses put large-scale technology projects on hold in 2020, as they raced to install remote collaboration and other business-continuity tools. The shift dashed rosier forecasts made before Covid-19 lockdowns and other restrictions were put in place. Gartner now estimates IT spending came in last year at roughly $3.8 trillion.
“Last year was about getting remote work working,” said John-David Lovelock, Gartner’s chief forecaster. “Now we’re transitioning to how do you make remote work productive,” among other business-wide initiatives, he said.
That includes returning to efforts to digitize business processes across the board and shifting them online into the cloud, a strategy broadly referred to as digital transformation. Cloud-based business systems and software, which can be scaled as needed to quickly respond to unexpected changes in the market, proved their worth during the pandemic, Mr. Lovelock said.
Companies are also preparing for the next unexpected market disruption by adding more resilient digital capabilities, so as not to get caught flat-footed and race to install last-minute emergency measures, Mr. Lovelock said: “They’re going from building cart paths to building a solid road.”
The rebound to pre-pandemic spending levels won’t spread evenly across industries, like banking and securities and insurance companies, which fared better during the crisis, are likely to boost IT spending faster than retailers and travel firms, Mr. Lovelock added.
“The spending recovery generally comes down to the industry recovery,” he said. “Some companies are not there yet.”
Liberty Mutual Insurance anticipates its IT spending will increase significantly, driven by its accelerating the core components of its digital transformation work, said CIO James McGlennon. That includes migrating workloads to the cloud, enabling customer interactions across all platforms, and gaining more insight into data, he added.
“Spending has increased from 2020 as we continue to pivot to focus on digital and data,” Mr. McGlennon said.
Write to Angus Loten at angus.loten@wsj.com
