For IT spend, a new coronavirus reality: Delayed projects and hiring freezes

Dive Brief:

Organizations are preparing to cut and/or postpone IT expenditures due to the novel coronavirus pandemic, according to preliminary data from a survey of over 1,000 IT decision makers from Enterprise Technology Research. However, for some, these cuts might be temporary.
Emerging and next-generation vendors are likely to feel an impact, as 19% of organizations shift resources away from IT projects and into infrastructure powering remote work. Leaders expect the financial situation will worsen over the next three months.
For 23% of organizations, there are plans in place to freeze hiring for the next three months, as organizations brace for a potential recession by keeping key systems running and lowering costs.

Dive Insight:

With 158 million Americans in 16 states told to stay home, 86% of companies in the ETR study say they've supported work from home policies for their employees.

For IT leaders, this means quickly shifting spending priorities into the tools that can enable remote work, such as videoconferencing, collaboration and virtual desktop infrastructure.

In turn, the move to remote work will require additional spending in security tools, as workers need to access company data with the same grade of security they'd have back in the office. The increase in remote work broadens the attack surface for malicious actors, who can exploit points of access such as videoconferencing platforms.

It's quite a different scene than what experts forecasted at the end of 2019. In October, more than half of companies expected their 2020 IT budgets to rise, with IT budgets accounting for 9.1% of revenue in North American companies. To keep up with expanding initiatives, six in 10 IT leaders expected to bring aboard project-based workers.

But that scenario is changing daily as the coronavirus pandemic reshapes most industries' outlook for the rest of the year. Companies are adjusting to redrawn revenue scenarios.

If a recession does play out in the coming months, experts say it might prove an ideal moment to modernize, as a dip in demand creates an opening for potentially disruptive modernization projects.