Summary Bullets:
- The COVID-19 crisis poses several challenges for IT infrastructure vendors and customers, including the initial disruptions created by the crisis and those related to longer-term economic slowdown.
- But it is not all bad news, and in various ways, the IT infrastructure sector is showing resilience, increased demand, and the potential to push through this crisis.
The COVID-19 crisis poses several challenges for IT infrastructure vendors and their customers. Some of these relate to the disruptions created by the onset of the crisis; others will stem from the slowdown in economic activity that is expected to accompany it. Economic slowdown will halt or delay IT purchasing and projects and make enterprise customers less likely to take chances with new technology investments. Project delays – whether due to supply chain issues, customer slowdowns, or illness among key personnel – will damage vendor bottom lines, while small vendors with low cash reserves may be severely impacted. The stresses being endured by people across the IT industry are very real and will also cause a loss of productivity and project delays.
Nevertheless, the COVID-19 crisis is not all bad news for the IT sector. Firstly, the extent of the economic slowdown that will accompany and follow this crisis is still unclear and much depends on the length of the crisis in specific countries and regions. It will also depend on government policy and initiatives for managing the crisis, as well as the ability of businesses to adapt to changing circumstances. Secondly, COVID-19 disrupted IT supply chains, closing factories and interrupting the production of IT products and the electrical components that comprise those products. However, with the crisis in China now apparently under control, many IT and tech manufacturers are already operating again at full capacity or currently in the process of getting back to business. Thirdly, the crisis is affecting individual enterprises and different vertical industries in a differentiated manner. While the postponement of IT projects is likely within industries hit hardest by the crisis, we could see a prioritization of new IT projects among other industries. Much depends on the nature of the IT project itself.
In various ways, the COVID-19 pandemic has also fueled demand for IT infrastructure. One immediate and obvious source of demand has been the shift to remote, home-based working for large numbers of employees and to remote learning arrangements for schools, colleges, and universities. This has created massive demand for the use of unified communications solutions with knock-on implications for data center and cloud IT.
The COVID-19 crisis has also encouraged a growing interest in emerging technologies, including big data, AI, IoT, robotics, and blockchain. During the height of the crisis in China, many of these technologies were put to use both to manage the health crisis and to help manufacturing continue to function. Prior to the outbreak of COVID-19, much of the talk within IT had been focused on the opportunities associated with IoT, edge computing, and 5G. Although it is likely that some IoT applications will experience a temporary setback because of COVID-19, many other applications could receive an accelerated focus as a result of the crisis.
Finally, across the industry, IT companies are also playing a critical role in working with governments to manage and contain the health crisis and its economic ramifications. There have been many initiatives, including the establishment of funds to help small businesses and struggling communities. They also include the provision of free services, as well as the relaxation of contract terms for customers who now find themselves in difficulty because of the crisis. Others initiatives include the provision of AI and compute resources to government and scientific research institutes to support efforts to find a cure for COVID-19.
For more insight into GlobalData’s ongoing coverage of the COVID-19 crisis and its implications for the technology sector, see the COVID-19 dashboard on our homepage.
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