22 February 2019

BREXIT and IT: To invest or not to invest?

According to respected market analysts Gartner, Global IT spending is set to increase despite Brexit, recession and tariff rumours. Gartner predicts global IT spending will reach $3.8 trillion in 2019, an increase of 3.2% from 2018. 

Thanks to the shift to the cloud, enterprise software will carry on growing in popularity, worldwide spending in this area is projected to grow 8.5% in 2019. Despite uncertainty fuelled by recession rumours, Brexit, and trade wars and tariffs, the likely scenario for IT spending in 2019 is growth. Well, at least that’s what John-David Lovelock, research vice president at Gartner, thinks. Gartner says in 2019, IT spending is projected to total $3.76 trillion, an increase of 3.2% from 2018. However, according to Lovelock, there are a lot of dynamic changes happening in regards to which segments will be driving growth in the future. He said: “Spending is moving from saturated segments such as mobile phones, PCs and on-premises data centre infrastructure to cloud services and Internet of Things (IoT) devices. IoT devices, in particular, are starting to pick up the slack from devices. Where the devices segment is saturated, IoT is not.”

Serverless computing, AI, network agility, edge computing, the death of the data centre, new roles, SaaS denial, talent management and global infrastructure drive the Gartner top 10 infrastructure and operations trends for 2019. “IT is no longer just a platform that enables organisations to run their business on. It is becoming the engine that moves the business,” added Mr Lovelock. “As digital business and digital business ecosystems move forward, IT will be the thing that binds the business together.” Thanks to this shift to the cloud, enterprise software will carry on growing in popularity, worldwide spending in this area is projected to grow 8.5 per cent in 2019. It will grow another 8.2% in 2020 to a total $466 billion (see Table below).

Despite decline in the mobile phone market, overall, the device market is set to grow 1.6 per cent in 2019.

“In addition to buying behaviour changes, we are also seeing skills of internal staff beginning to lag as organisations adopt new technologies, such as IoT devices, to drive digital business,” said Mr Lovelock. “Nearly half of the IT workforce is in urgent need of developing skills or competencies to support their digital business initiatives. Skill requirements to keep up, such as artificial intelligence (AI), machine learning, API and services platform design and data science, are changing faster than we’ve ever seen before.”

Blockchain, artificial intelligence, empowered edge, privacy and ethics, quantum computing, immersive experiences, augmented analytics, autonomous things and digital twins drive the Gartner Top 10 Strategic Technology Trends for 2019. Many emerging technologies, pertinent to the supply chain, will be investigated in more depth in a series of Technical Bulletins from Touchstar Technologies (see http://www.touchstarpod.com/blog).  

IT Strategies for Brexit  

If the ‘gloom and doom’ predictions prove correct and Brexit helps to trigger another recessionary period, notably for the UK, why on earth would business organisations contemplate spending increases? With scary economic numbers projected, IT might feel inclined to panic. But now is the time to stand tough, advises Andrew Reichman, senior analyst at Forrester Research. "Companies should tighten their belts, not take their pants off," he admonishes. IT heads of department have to come up with “better reasons" for the technologies to which they allocate IT resources but must continue investing in certain areas, no matter how crazily the economy bounces up or down.

Doing this means taking a comprehensive view of organisational expenses and prioritising. Understanding which technology investments help to increase productivity and better serve clients is the first step. Continuing to fund these strategic technologies during an economic downturn is very important. With a recession technology plan in place, your organisation can survive, and even thrive, within this turbulent economy.

Here are three steps to take when putting together your IT strategy for the slowing economy.

Step 1: Re-evaluate Your Needs

Treat recession planning like budget planning. Changing economic conditions require a change in thinking. Just as you re-evaluate your expenses from the previous year when planning for a new fiscal year, you need to re-evaluate your current operating budget during a recession.

Ask yourself the following questions: ·        

  • What technology must be maintained or implemented that makes you indispensable to your customers or partners? Your target markets will be feeling the recession too; you want to make sure their relationship with your organisation continues by providing efficient, affordable, and premium service. ·        
  • Do you have technology in place that is instrumental in helping you attract new customers and retain current ones? Your bottom line is key in a recession. Since any additions will greatly impact the bottom line, consider maintaining technology that supports customer retention throughout the economic downturn. ·        
  • Is your current method of technology and network support working for you? Is it cost-effective? Efficient? If not, it may be time to consider other options. Rebalance technology investments by looking at the comprehensive picture. Don’t focus on shutting them down; focus on making strategic IT investments.

Step 2: Stretch Your IT Pounds

If yours is like most organisations, it needs to make budgeted IT pounds go further. Here are a few ways: ·        

  • Save on upgrades: Wait to make any noncritical upgrades until after the recession is over.       
  • Stretch equipment life cycles: Workstations usually have a three-year life cycle. During a recession it is OK to stretch this to four years, though you may want to consider minor upgrades such as increasing RAM.          
  • Review software licensing and support agreements: As part of your re-evaluation, you should take time to review all of your organisation’s software licensing and support agreements to make sure you are not paying for duplicate coverage.

Step 3: Spend Smart In a recession

Organisations often panic and tighten their belts to the point of passing out; and then they are down for the count. So whatever your IT strategy for dealing with an economic downturn, don’t be cheap. Good spending does exist and it comes in the form of IT investments that will add to your organisation’s productivity.

Here are five IT investments you should consider, even during a recession: ·        

  • Security investments: Protect your company with firewalls, Microsoft patching, antivirus and spyware protection, and so forth. It’s critical to maintain all services that are protecting your network and keeping your systems up and running because no organisation can afford a loss in productivity, especially during a recession.
  • Warranties: If you are stretching the lifetime of your hardware, you should not skimp on hardware maintenance. Be sure to extend your warranties.
  • Proactive IT service: Without proactive monitoring, problems are much more likely. This is even more important during a recession because calling your IT service provider only when something goes wrong incurs much higher service costs.
  • Backup and disaster recovery mechanisms: Ensure your backup and disaster recovery systems are working well. You don’t want operations to stop during a recession should something happen with your front-line business applications.
  • Line of business applications: For all businesses, this means continuing to support technologies such as supply chain software that make the operation more efficient. Continued productivity is key in slow economies.

Touchstar Technologies provide IT solutions that are proven to improve operational efficiency and directly impact the bottom line. We invite you, as an integral part of your IT review process, to examine the case studies and user testimonies within this website …. they could be key to your survival!


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