Public company executives often have convenient explanations for why revenue targets were missed. “Bad weather” is a common reference for retailers, for example. “Bad weather” kept consumers from shopping. Bad weather depressed demand for spring clothing..
But “Covid” provides a rationale for revenue misses as well as expectations for revenue growth. That is not misplaced. But all Covid effects are “at the margin.”
Covid is argued to have pushed forward some information technology spending that otherwise would have taken longer. That is expressed in the phrase “a year’s change in a few months.”
“Covid-19 has proved a catalyst for investment in technologies that will help them navigate the post pandemic world, with a ramp in spending evident on cloud computing, DaaS Device-as-a-Service) and IoT, as well as investment in 5G and Wi-Fi6,” say researchers at Strategy Analytics.
But many of the changes do not necessarily seem related to long-term transformation. About 33 percent of U.S. survey respondents said they would increase communications spending between one percent and five percent over the next couple of years.
But that might be true most years: though most spend roughly the same amount, sizable percentages spend less or more. Also, less spending in 2020 might be expected to rebound in “more normal” years to follow. Mobile roaming charges, for example, were far lower in 2020 than in a “normal” year, as fewer people were traveling. A change between one percent and five percent would, in many cases, simply reflect a reversion to mean.
With or without Covid-driven conditions, that is a reasonable belief. In the U.S. market, mobility spending alone grows about three percent a year.
About 20 percent of respondents guessed that their IT spending would grow by more than 10 percent over the next two years. Again, that might be typical in any “normal” year. Gartner, for example, predicts global IT spending will grow nine percent in 2021 alone. Spending also increased about the same amount in 2020.
It is hopes for “digital transformation” that drive that investment, however, not Covid response. Global IT spending has grown since 2005, for example. And Gartner has predicted four percent growth of IT spending in 2021, for example.
Yes, some changes in spending were driven by Covid. But the fundamental longer-term changes, as shown by the Strategy Analytics survey, do not require Covid as an explanation.
Covid had an effect, to be sure. With more remote work happening, demand for home broadband connections appears to have increased. But other changes, such as a shift to cloud computing; hardware as a service and internet of things adoption, are harder to analyze.
Such transformations take time, and the sudden work-from-home demand would not have allowed enough time for executives to make many fundamental changes. The same goes with other investments in technology such as blockchain, artificial intelligence, virtual or augmented reality or edge computing.
Those changes require many other shifts of architecture and business processes that simply cannot be turned quickly, in a couple of months.
In fact, many IT teams arguably found themselves shifting spending towards buying of personal computers and remote work software licenses rather than anything else related to computing or communications architecture.
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