While a new forecast released Monday by Spiceworks/Ziff Davis said that overall IT spending will be largely unhampered by recessionary trends in the economic outlook, much of that spending will be driven by large enterprises, leaving the picture much murkier for small and medium-size businesses.
The forecast is based on a survey of IT professionals in the US and Europe, which was performed this summer by Aberdeen Research. Fully 90% of respondents said that they either planned to increase spending or keep it steady in 2023. However, the impulse to buy is not evenly distributed across companies—while 61% of large enterprises said that they plan an expansion of IT spending in 2023, just 41% of smaller companies said the same.
Counterintuitively, the researchers said, companies more worried about the effects of a possible recession were more likely to have bigger IT spending in their future plans than those who were not. Just 30% of companies with “no plans” to make major preparations for a recession reported that they were getting ready to hike IT spending, in contrast to solid majorities—68% and 55%—for companies who were already making recession plans or planned to in the near future, respectively.
That level of preparedness, coupled with the fact that some companies may be planning to reinvest cost savings from other areas into IT, reflect lessons learned during past economic downturns, according to Jim Rapoza, vice president and principal analyst at Aberdeen.
IT spending during a recession shows benefits
“Businesses that invested in technology during the pandemic saw significant benefits,” he said on a conference call announcing the study’s results. “Our research revealed improvements across performance, reliability, security and even reduced overall IT costs among organizations that modernized their infrastructure —even if that was initially out of necessity.”
Essentially, he said, recessions shouldn’t spur IT cutbacks. Companies that did so in 2001 and 2008 were frequently punished for it by the market. Hence, larger businesses , particularly those that have already weathered past economic crises, tend to be much more likely to either maintain their IT spending levels or even to increase them during economic headwinds.
That trend is already recognizable in the figures for uptake of newer technologies, the study found, particularly 5G, edge, serverless computing, and AI. Part of the reason for that is that many of them are interrelated. The type of connectivity enabled by 5G makes it easier for some companies to deploy edge computing, which creates the volumes of data required to feed AI models, and so on. Hence, companies with the financial wherewithal to either build those capabilities out on their own or hire managed service providers to take care of them—that is to say, big businesses—are much more likely to be working on them, and thus are more likely to reap the benefits.
That fact, along with the higher uptake of managed services in general among larger companies, could mean that such enterprises are better prepared to weather an economic downturn, or any other kind of large-scale headwind on the market, according to head of tech insights at Spiceworks/Ziff Davis, Peter Tsai.
“The pandemic’s not over—what if there’s another deadly wave that forces everyone to go remote again?” he said on the conference call. “Having that hybrid infra makes it easier to flip that switch to ‘remote’ back on.”
Budget, Technology Industry