Even amid the coronavirus-induced economic slowdown, companies worldwide increased their tech investment. Corporate technology leaders say COVID-19 provided a strong case for raising their spending. As the pandemic spread, companies —big and small alike— raced to deploy remote work and business continuity software.
The pandemic left businesses and organizations worldwide more reliant than ever on their software infrastructure. It also prompted a large-scale shift to cloud computing, automation, and data analytics. Analysts say trends like these helped tech executives strengthen their case to invest in digital transformation solutions for avoiding disruptions. CIOs and other IT executives say they plan to bolster tech investments in 2021, The Wall Street Journal reported.
Accelerated digital transformation
From retail to entertainment and banking to travel, industries of all kinds have scaled up digitization during the virus outbreak. Cathy Besant, CTO at Bank of America, said the bank plans to invest $3.4 billion in digital solutions in 2021 (according to WSJ). That’s a noteworthy single-year spending on tech.
The bank intends to enhance its client services and operational efficiency, among other areas. And it’s not just Bank of America or any large bank alone. Global IT spending will reach around $3.7 trillion in the next year, according to a report by the consulting firm Gartner. It’s a significant 4.3% increase from 2020. Within the IT spending, total investment in enterprise cloud solutions is estimated to grow a staggering 27.6%. That’s around $64.3 billion, according to the Gartner report.
The growing dominance of tech founders
Besides the sweeping wave of digital transformation, we saw another remarkable industrial trend in pandemic-altered 2020. Tech founders became more powerful than ever — especially in financial markets. If you follow technology news, you must have read about the recent IPOs of Airbnb and DoorDash . These two tech startups entered the financial market with much fanfare in the news media.
Investors were more inclined toward tech in 2020. For instance, the shares of Airbnb more than doubled on the first day of trading itself. A strong financial market means tech founders have more control over how they manage their companies. It’s particularly critical in terms of corporate governance. For example, the founder of the AI company C3.ai has 50 votes per share compared with the standard 10-votes.
COVID-19’s impact on corporate boards
While tech executives rise on the ladder of the industrial power structure, COVID-19 dominated discussions in board meetings. The disruptions caused by the pandemic compelled corporate leaders to think about tech solutions in new ways. According to a Gartner survey in September, about 70% of corporate boards said COVID-19 impacted the spending on digitization and IT solutions.
Apart from enabling smooth operations amid the pandemic, digital capabilities also helped companies scale up or venture into online commerce. As online stores strained under overwhelming demands, migration to the cloud and other capabilities helped businesses tackle those challenges. For instance, the online marketplace Etsy completed a migration to the cloud just before the pandemic hit the U.S. A cloud-based system enabled the company to move to 5.5. petabytes of data from around 2,000 data centers. It not just enhanced operational efficiency, but also created a scalable storage system.
However, some companies have a wait-and-see approach to boosting tech investments. They’re closely analyzing the risks and rewards of IT strategies in a rapidly changing market.
Flexibility as 2020’s leadership lesson
Many corporate leaders say that 2020 taught them to be more flexible about planning and decision-making. They say 2020 made them conservative when it comes to planning things for the distant future. The year reshaped so many things in the tech world. As the CIOs and CTOs strengthened their tech investment plans, tech founders earned the right to have even more control. Tech CEOs worldwide are more focused than ever on building an enduring, disruption-proof business rather than on short-term results.
Pandemic-induced tech trends have flourished well in India, as well. And the wave of digital transformation has swept domestic businesses and outsourcing companies alike. For instance, Tata Consultancy Services, India’s largest software exporter, plans to expand its tech spending. The company intends to venture into emerging areas like cloud-based tech models, digital collaboration, contactless operations, and advanced analytics, among others.