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Why cloud IT spending will experience a major boost in the ‘new normal’

Eva Weber

September 16, 2020

After many years of continuous growth, IT investments are predicted to drop by 7.3% in 2020 , according to Gartner, with the largest gaps expected in spending for hardware such as IT devices and data center infrastructure. At the same time, this renowned market research company predicts worldwide revenues that relate to public cloud IT services to increase by 6.3% in 2020 . At first glance, the reports deliver contradictory messages; but in reality, they underpin the fact that the cloud computing will continue to surge during the months ahead.

Fast adoption of cloud computing IT within a slow IT market

In the beginning of 2020, the COVID-19 pandemic reached the world quickly and caught enterprise companies by surprise. Very strict lock-down regulations in many countries cut off supply chains, made customer meetings impossible, banned employees from offices, and caused an atmosphere of uncertainty. This led to shrinking revenue, investment cut-offs, and reductions in spending (including IT) in many companies.

As economies gradually re-open during the post-pandemic phase, the need to conduct postponed IT projects will lead to new IT spending—but in a changed world. In the ‘new normal’ post-pandemic times, companies will re-evaluate their IT plans, and very likely pursue cloud IT strategies.

Why will enterprises move their IT into the cloud faster than ever?

The following trends will underpin the pursuits of enterprises to move their IT infrastructure into the cloud:

• Enterprises that were concentrating on ways to enable employees with home office workspaces and remote access to enterprise IT resources found an excellent solution in cloud IT systems, with their natural remote access architecture. Even once the danger of COVID-19 ceases, many companies will continue to leverage remote working environments for their staff, benefiting from the reduced cost for real estate and the HR ability to attract new talents from distant areas.
• Enterprises that were seeking ways to optimize resources, carefully plan cash, save costs, and defer payments discovered perfect answers in the elastic payment approach of the cloud business model. The financial benefits of pay-per-use and subscription pricing models that are naturally connected with cloud business became clear to many CFOs, who will not forego seeking financial optimization tools even in post-pandemic times.
• Many enterprises were strongly affected by the economic impacts and had to switch into critical ‘survivor mode.’ These companies had to sharply focus on their core business and protect business relations with their customers—and as a result, refrained from investing in their own IT infrastructure but rather outsourced many IT services in order to stay flexible. This included reducing IT personnel as well as savings on upfront payment for IT hardware and software purchases. The necessary IT resources were preferably rented within the cloud space. As the business starts growing during the post-pandemic times, the rented cloud IT resources will be able to scale with it.

As enterprise customers will be increasing their spending for cloud-based IT systems, IT providers must get ready with offerings that meet the demand of their clients in the ‘new normal’ post-pandemic world: the need for flexible and scalable cloud-based applications that can be accessed by users 24/7 from wherever people need to access them—from the standard office, from the home office, or from the beach.

Cloud Enterprise

Eva Weber

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