Survey unearths growing spending and big changes in enterprise technology transformation
Last week we revealed the results from our annual Senior Leadership IT Investment Survey, which explored investment and adoption plans for a range of areas that have become vital during the pandemic. They include cloud computing, remote work and collaboration, security and trust, machine learning and application development.
We polled more than 730 senior executives, predominantly in large organizations in the US and Europe spanning several industries in late July 2020. This year, against the backdrop of the Covid-19 pandemic, we focussed on respondents with director or above roles, with 60% holding C-level positions, including 20% in CEO positions.
The seniority of respondents revealed some important and timely insights into how events in 2020 are moulding business strategies, both in the immediate term and beyond the grips of the current phase of the health crisis.
Here we give a brief overview of our top five highlights of the survey and what they mean for businesses.
The full report, Senior Leadership IT Investment Survey, 2020, is available to our clients now.
1. IT spending grows, despite the recession, as security needs shift
2020 has challenged the assumptions and priorities of many businesses, and the burgeoning global recession will continue to make it a tough climate for many industries. But the pandemic has also reinforced the importance of technology strategy and investment, which has played a major role in determining which businesses remain viable and competitive.
With a recession and tightening budgets painting a gloomy background, our survey shows that executives see tech investment as fundamental to business strategies and bucking these trends. Almost 65% of respondents expect to increase their IT spending in the coming year. Just 14% of companies in our research said their IT budgets are in decline.
Naturally, cloud computing and remote collaboration have been the main technologies to benefit from the impact of Covid-19, and both remain among the top priority investment areas for 2021.
However, with almost six months of widespread remote working under most businesses’ belts and a regulatory climate and threat landscape that are constantly in flux, the next phase of the crisis is exposing new challenges, most notably in IT security, which our survey identifies as the biggest investment priority overall for 2021.
Cloud infrastructure and application security in particular, are now top of mind for most security decisions, as organizations have been rapidly shifting to the cloud (see below). Security is also flagged as a priority in multiple areas of our survey including collaboration tools, investment in artificial intelligence (AI) and determinants of trust in tech suppliers.
2. Attitudes to remote work have changed dramatically
The pandemic has also triggered a fundamental shift in the way business leaders view remote work.
According to our survey, over a third of businesses expect more than half their workforce to work mainly from home in the wake of the pandemic, compared with just 15% prior to the outbreak. Following public announcements from the likes of Schroders, Twitter and Fujitsu, among others, which are committing to better supporting flexible or home working on a permanent basis, we expect that about 40% of the overall workforce in the US and Europe will work predominantly from home after the pandemic, compared with just 25% previously.
These trends have also meant that collaboration technology, and particularly video meeting platforms, have become mission-critical, with Microsoft Teams now dominating the market, deployed by 46% of businesses in our survey. Zoom has jumped to second place, used by 28% of businesses.
The next frontier for businesses is how to reintroduce office-based working and a hybrid approach that mixes primarily remote work with a much lower level of office-based working. This stage is raising new challenges, not least in relation to physical meeting rooms. Almost 40% of businesses in our survey voiced a need to upgrade their meeting technology to empower office-based and remote teams in a hybrid working model.
3. Cloud migrations accelerate, Microsoft Azure the biggest winner
Perhaps the biggest area of change has been in cloud computing. The combination of remote work, the need to rapidly move operations online to maintain business continuity, and the elasticity of cloud services that helped to cope with spikes in demand during Covid-19 has sparked a rapid rise in adoption of cloud services in 2020.
The number of businesses with more than half of their IT workloads hosted in the cloud is expected to double to 56% within the next year, and a quarter of respondents expect to have over 75% of their workloads in the cloud by the same period. Although nearly half of organizations are embracing a multicloud strategy — a significant rise from the 22% in our 2019 survey — one of the most eye-catching results is that Microsoft Azure is now listed as the most-used and trusted public cloud for senior leaders, ahead of IBM, Google Cloud and Amazon Web Services (AWS).
We maintain that AWS remains the leader by volume of IT workloads in the cloud and by cloud revenue, but Microsoft is the most commonly used public cloud in a largely multicloud context now, according to senior leaders, and is most frequently favoured by those with a single or preferred cloud strategy.
4. The value of trust
Along with the impact of Microsoft Azure’s software-as-a-service applications and strength with European senior leaders in particular, we believe one of the most important factors in its standing stems from trust.
Once again our survey shows that, when it comes to handling company data, senior IT leaders trust Microsoft significantly more than most of the big tech and cloud players, with the company receiving particularly high trust scores in the UK and with large organizations.
One of the most enduring features of the pandemic is the greater importance customers now place on their trust in technology suppliers, particularly their cloud providers. The area has become a source of competition among major cloud providers and our survey revealed several factors shaping this trust, including security technology, reliability, engagement and a clear position on customer data and privacy.
Most of the cloud providers have led in this area this year, reinforcing our 2018 prediction that trust would become the most important source of competition among cloud providers in 2019. But Microsoft and also IBM — which is the second most trusted provider according to our research —appear to be cutting through the most with senior leaders.
5. Artificial intelligence opens a new chapter as businesses gain operational maturity
A final highlight was in the emerging area of AI and machine learning. A year ago, most businesses were running trials with machine learning, and during the pandemic many turned to the technology to aid their responses, applying it in areas such as chat bots, contact centre assistance and demand forecasting.
As a result, the AI market has matured over the past year. More than 80% of the survey respondents are now either trialling or in production with AI, up from 55% in 2019, and 58% plan to up their investment in the technology. As more firms become operationally dependent on machine learning, they’re finding new challenges associated with its risks as well. Security is now the biggest hurdle organizations face with AI systems, and more than 80% of respondents are concerned about ethical perils stemming from the uses of AI.
Given these issues, the security and privacy of machine learning data is now the top consideration for investment, ahead of capabilities to improve the management of the machine learning life cycle, as well as tools for responsible development and deployment.
Conclusions
Mainly targeted at C-suite executives, our 2020 survey of IT decision-makers offers fascinating insight into many of the most important aspects of technology transformation that will shape enterprise strategies for the coming 12 months.
The health crisis has forced businesses to re-evaluate their IT strategies and embrace a digital transformation that boosts their agility and resilience. This has brought about large changes over the past year in many areas such as cloud computing, remote work and collaboration, application development, machine learning and supplier preferences.
But senior leaders expect even more change ahead in 2021, as they rationalize decisions made so far and look beyond the current phase of the pandemic while staring into an economic abyss. Above all, our data makes it clear that technology isn’t just helping businesses react and adjust, but ultimately grow in the difficult times ahead.
We look forward to tracking these developments and more over the coming months.
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