ChannelVision Magazine

Martin Vilaboy Editor-in-Chief martin@bekabusinessmedia.com Gerald Baldino Contributing Editor gerald@bekabusinessmedia.com Percy Zamora Art Director percy@bekabusinessmedia.com Berge Kaprelian Group Publisher berge@bekabusinessmedia.com (480) 503-0770 Anthony Graffeo Publisher anthony@bekabusinessmedia.com (203) 304-8547 Beka Business Media Berge Kaprelian President and CEO Neil Ende General Counsel Corporate Headquarters 10115 E Bell Road, Suite 107 - #517 Scottsdale, Arizona 85260 Voice: 480.503.0770 Fax: 480.503.0990 Email: berge@bekabusinessmedia.com © 2020 Beka Business Media, All rights reserved. Reproduction in whole or in any form or medium without express written permission of Beka Business Media is prohibited. ChannelVision and the ChannelVision logo are trademarks of Beka Business Media Following two years of mostly growth in business IT spending, 2020 could see something of a slowdown. According to a November 2019 survey of 451 Research’s Alliance Member companies, “Business IT budgets currently indicate a sharp decrease in comparison to the previous two years,” said the research note. About 15 percent of the approximately 600 IT staffs surveyed expect their budgets to increase over last year, but 17 percent said there will be a decrease or no spending in 2020, for a net negative of 2. “On a net basis, this is 7 points low - er than last year and the first negative November reading since 2016,” said 451 researchers. Expectations for the first half of 2020 even were down compared to the previous quarter, so as organizations gained clarity on their upcoming year, their outlook on spending grew dimmer, show 451’s figures. The good news is 451 surveys may have illuminated a bright spot. “Digital transformation is again making a difference among organizations,” said the research firm. As it turns out, companies that are embracing or moving forward with digital transformation initiatives are more optimistic about 2020, have more clarity in their budgeting and more willingness to spend on IT projects. Perhaps this is not surprising. After all, companies that understand digital transformation understand that digital technology and IT innovation must be applied to all areas of their businesses. And these applications not only improve operational efficiencies but also enhance business agility and competitive differentiation and improve the customer experience while better managing risks. Even so, IT solution providers and their sales agencies would be wise to qualify companies that already “get” digital transformation and evangelize the companies that are not quite there yet. Among companies in the execution stage of their digital transformation initiatives, for instance, 20 percent expected their budgets to increase in 2020, while 16 percent expected a decrease or there to be no spending, leading to a net positive 4. This compares to a net minus 9 (11 percent increase and 20 percent decrease/no spending) for digital transformation laggards and the net negative 2 among respondents overall. Meanwhile, digital transformation leaders’ willingness to spend (net positive 21) is four-times greater than that of laggards (net positive 5), show 451 figures. What’s more, “The length of time required to execute a digital transformation strategy appears to create higher IT budgets within a company during the transition as new technologies are implemented,” said 451 analysts. Even better news, more than half of respondents (53 percent) believe digital transformation will remain an ongoing effort and will never truly be completed. “If true,” said the 451 report, “the future is bright for corporate IT spending.” The Digital Transformation of IT Budgets LETTER 6 CHANNEL VISION | March - April, 2020