As businesses everywhere struggled to get a true sense of Covid-19 during the first month of lockdown, data analytics company Global Data predicted that the impact of Covid-19 on the IT services sector will be deep, immediate, and long-lasting. One month on and thoughts are indeed beginning to turn from the immediate business continuity challenge of keeping companies running remotely, to the far more insidious financial fallout of the pandemic, as the long-term economic impact leaves businesses facing significant cashflow and liquidity challenges.
According to IDC, worldwide IT spending is now projected to decline by 2.7% in 2020 as a result of the pandemic. Meanwhile a recent CFO survey from Gartner found that 70% of CFOs are making changes to their long-term investment plans.
And yet against this backdrop, the continued digital transformation of businesses will be more vital than ever, not just to help them get through lockdown but also to set themselves up for a successful rebound.
In fact, many industry commentators are telling businesses to accelerate their projects if they want to give themselves a fighting chance. To bring in Gartner again, Sandy Shen, Senior Director Analyst, has said of Covid-19: “Businesses that can shift technology capacity and investments to digital platforms will mitigate the impact of the outbreak and keep their companies running smoothly now, and over the long term.”
So whether you’ve gone through the hard work of getting a digital transformation project up and running only to find it put on ice, or find yourself facing an uphill battle to get new projects moving in response to the pandemic, how can you unlock them from limbo?
Even in today’s uncertain business climate, there are options available for companies seeking to continue their tech investments despite a squeeze on funds. Indeed, this is something vendors like Aruba, a Hewlett Packard Enterprise company, have been giving serious thought to in recent weeks, evaluating our finance portfolios to find a way to support both customers and partners.
In general, there are two main avenues to explore when it comes to flexible financing:
- Defer or reduce expenses. Vendors may let you delay payments for a set period of time, typically a number of months, or start your payments on a reduced rate and offset the balance at an agreed date in the future
- Generate cash from assets. Vendors will offer to buy back your existing IT assets or other infrastructure and lease it to you as a service
Determining which option suits your business will largely depend on your current IT real estate and preferred future consumption model. What is the scope of your existing tech infrastructure? Do you want to continue to own it or are you happy to pay to use it instead? Are you comfortable outsourcing its management or would you like to keep it in-house?
Your sector may also be a deciding factor, as certain sectors will be more risk adverse when it comes to moving their IT solutions off-premise and handing over their management. Good examples of this include financial services and healthcare, both of whom have serious data protection issues to navigate when it comes to changes to their IT infrastructures.
What to do next
There is no doubt that Covid-19 has been a wake-up call for companies in terms of how ready they are for a truly digital age, with many finding that their current infrastructures and systems are simply not able to cope with the demands this brings.
In the coming months it will be important not to lose sight of the fact that the digital age will not end when lockdown does. The need to transform existed before the pandemic and it will continue long after, particularly as consumer behaviours and habits become permanently changed by the experience of living remotely.
In light of this, you cannot afford to let your digital transformation journey stagnate. So, continue to pressure your C-Suite on its digital transformation promises, assess what consumption models your business will be comfortable with coming out of the crisis, and challenge your vendor on their financial portfolio. If they are anything like Aruba, they’ll want to help.
By Morten Illum, EMEA Vice President at Aruba.