Markets are in turmoil, workers are furloughed, and the future is uncertain. So how has that affected spending on enterprise technologies like AI, IoT, and mobility technologies like remote assistance and digitally enabled field service?
If a new survey by global ERP software provider IFS is any indication, many companies are doubling down.
IFS, which specializes in working with manufacturers, utilities, telecom, and other industrial sectors, recently surveyed more than 3,000 business decision makers in the US, UK, EU, and Australia on how the current economic climate is impacting their tech and digital transformation plans for the months ahead. Notably, despite the impact of the pandemic on businesses worldwide the majority are planning to increase their investment in digital transformation – with many indicating that if businesses don't commit now, they'll likely dissolve within the next five years.
There's some nuance to dissect here, including geographical variance, but the headline seems to be that greater economic and market anxiety caused by COVID-19 is actually increasing digital transformation spending. When the survey opened in early April 2020, about half of respondents said their business was disrupted by the bleak outlook for the economy. It's fluctuated since then, but clearly a large percentage of businesses are worried about market outlook.
The assumption would be that spending on digital technologies would tighten. Instead, responses seem to indicate that concern with the economy tracked closely with plans to increase digital transformation spending. IFS observed that most significant directional trend movements of 10 or more percentage points in the answered questions track closely with each other. What's more, when 'economic outlook' was specifically cited as a disruptive factor for a business, those respondents were a full 20% more likely to report plans to increase spending on digital transformation.
In fact, almost 70 percent of respondents said they were either increasing digital transformation spending or keeping it at current levels.
So what gives? In part this is just the continuation of a longstanding trend. Digital transformation spending has been increasing dramatically year-over-year and topped $1 trillion last year. Switching enterprise software technologies isn't something most companies do quickly, so much of this spending may already have been accounted for under existing budgets.
But that doesn't explain the strong correlation between economic outlook of markets and the uptick of spending. Certainly the global move, where possible, to work-from-home has forced a reevaluation of digital technologies, particularly those aimed at increasing worker mobility.
In the robotics space, which I cover, there are early indications that automation is winning a long simmering PR fight because of the pandemic as companies ditch their "workers first" messaging and begin heralding automation as the way to fight disruptions that humans are subject to. That same attitude could be migrating to robotic processing automation and related AI/ML enterprise applications.
Whatever the reasons, it's become clear the enterprise may look very different coming out of the pandemic. Turns out that may include a software upgrade.