Despite Business Growth Challenges, IT Spending Shall Grow

Based on an analysis of the inputs from 96 CEOs and 110 CIOs of large and mid sized Indian enterprises, here are 10 insights on their priorities for 2021.

#1 Strategic recalibration has been accelerated by COVID, business remodeling and organizational restructuring shall follow

As predicted for 2020, strategic recalibration in fact has been real, catalyzed by the COVID crisis. 71% of the CEOs claim that either they have made major adjustments in their strategy or even embraced a completely new strategy. One can easily claim that the new strategic orientation will take its own time to get implemented on the ground and the impact to come only in the next 2 to 3 years, with remodeling and restructuring falling in place.

#2 Business growth shall remain uncertain during large part of 2021

COVID impact on business is far from over. 48% of the CEOs expect it to be present through 2021 and another 21% think it may have subsided but may take time to go away. This has implications for the growth scenario that they envisage, 51% see the growth looking uncertain or may take another 6 months to return. This thinking is only natural, given that a vaccination program will also take 6 to 9 months to cover the entire population. And then there are scares of new variety of viruses emerging. All put together, the environment will remain uncertain for a large part of 2021.

#3 Despite business uncertainty, IT spend will grow in 2021, driven by digital

The domestic IT spend, that witnessed a negative growth for the first time in history in 2020, the market is expected to bounce back with a 8.8% growth in 2021. Digital spend is saving the day as traditional IT remains under pressure with 11% de-growth in 2020,

A great realization that has set in the CEO’s mind is that of digital transformation. Their new strategic orientation is built largely with digital at the core. This is clearly evident from their stated strategic priorities where IT Model (54%) and Digital Transformation (46%) are at the top.

This has direct implications on their IT and Digital Spend and the specific mix of that spend. Even with business scenario remaining uncertain, businesses will continue spending on IT and Digital.

#4 Digital transformation is a top priority but preparedness to drive it is inadequate

The preparedness of the organization to grow in 2021 is low for 44% of the CEO, another 27% feel they are just prepared. There are many aspects like structural support (cross functional teams, CXO role defined specifically for digital, KPI definition) and collaboration with start ups and industry/ academia where a focus is yet to be given.

#5 The top enterprise priorities of adopting digital, ensuring security and BCDR, and IT operations automation are reflection of the environment that businesses are operating in

The triple imperatives of agility, sustainability, and efficiency with inherent tensions among them has been clearly brought to fore by the COVID crisis. The gradual enterprise approach has been replaced by an urgent focus on leveraging IT and digital to manage the tension while focusing equally on the three competing demands.

#6 ~80% of the organizations are far from holistic transformation, most of them are either building individually digital pillars or busy converging them with the core IT

Enterprises are on a Digital journey, evolving over four broad phases of flirting at the periphery, building individual pillars, converging the digital with the core, and transforming holistically. While 54% of the enterprises are either building individual pillar or converging them with the core, only 22% claim to have reached a higher evolution in transforming themselves.

#7 Integrated digital marketing remains the top domain for digitalization in 2021

Though there are multiple domains like Finance and Accounts, Sales Automation, Management Dashboards, Facilities and Administration, Performance Management System, and eLearning stated as top priorities by the CEOs or the CIOs, integrated digital marketing is at the top for both. Digital marketing has been a focus for few years now and moving forward an integrated approach to digital marketing is being planned.

#8 The emerging technologies planned for 2021 sums up the nature of the new IT environment

Hybrid IT management (60%), cyber security (55%), cloud (51%), social media (49%), and IoT (49%) emerge as the top focus of the Indian enterprises in 2021. They are in line with the bigger organizational needs of agility, sustainability, and efficiency.

#9 Fully automated, well integrated, and possibly highly autonomous IT applications and operations is what will support the new age imperatives of agility, sustainability and efficiency

The complexity of hybrid IT has to be managed with automated processes and analytics driven process triggers.

The areas of high investment for 2021 – SaaS, E2E managed IT services, IT helpdesk automation, managed security services, is a well thought out plan to build an automated, integrated, and possibly autonomous IT applications and operations platform.

#10 CX or customer experience shall remain a disjointed construct in 2021

Though 21% of the CEOs and 29% of the CIOs have stated CX as an organizational priority, for the majority it will at best remain a disjointed construct. It will be driven by isolated initiatives on giving customers a better experience, falling short of emerging as a holistic drive.

The complete report is now available here.