decline in spending
02 Sep 2020

Worldwide IT Spending to Decline by 7.3% in 2020

Back in 2019, the worldwide spending on IT equipment reached $3.8 trillion. However in 2020, this is a different story. Due to the global pandemic, spending will decrease by 7.3% to reach $3.5 trillion.

As Covid-19 hit the UK, businesses felt the full impact and had to take precautions to ensure they could stay afloat. Gartner has suggested that there are three phases to the pandemic response.

Phase 1 – Respond

This phase focuses on the immediate actions being taken by businesses to keep their employees and the public safe. This was a short-term phase and included some ‘chaotic’ activity to try and temporarily reduce any harm. In March 2020, when a large amount of businesses were forced to shut their offices at the beginning of phase one, it became paramount for them to spend on IT equipment to enable their workforce to continue working from home. This caused a short, temporary spike in the purchasing of IT equipment.

Phase 2 – Recover

This is a more organised period where it allows businesses to create a plan to try and help the organisation recover from any effects of phase one. It is thought that as organisations enter this phase, they will have a back-log of IT projects. As more money was spent in phase one initially trying to respond to the pandemic, it has left business with a lot less money to spend, especially on things like IT equipment.

John-David Lovelock, Research Vice President of Gartner says, “with the easing of lockdown restrictions, many enterprises will soon return to a higher level of revenue certainty allowing some cash flow restrictions to ease and CIOs to resume spending on IT again.” However, this will not be the case for all businesses. Some businesses will not have the cash to spend for some time. This is where it becomes important to think of ways in which organisations may be able to complete the projects they require, but at a lower price. One way to do this would be to stop buying brand-new IT equipment and make the transition to purchasing refurbished. Not only is this initially less expensive to buy, it may also allow the business to purchase a higher specification product which will work better without having to upgrade any time soon.

Phase 3 – Renew

This is an extended period in which new operations processes are used in repeatable and scalable ways. Lessons are learned from phase one and two to improve the efficiency of processes within the organisation to improve success. For example, it would be during this stage that the business will see the positive impact that buying refurbished IT equipment has had on the organisation. As it frees up money to be used in other areas, it will allow them to improve other processes which increases their growth. From this, they could make buying refurbished a permanent decision.

In conclusion, although there was a temporary spike at the start of the pandemic, the amount being spent on IT equipment is not expected to reach the 2019 level soon. It is thought that any growth in IT spending will not occur in 2020 but will push into 2021. For the time being, it is important that businesses focus on their survival and growth through this difficult time. This may require purchasing IT equipment but by buying refurbished IT equipment, they are able to spend less money on these projects, and focus their spending in other areas which could help contribute to the growth of their business post covid-19.

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