2020 was a year of unprecedented challenges. In the B2B Tech channel, companies were challenged by the total disruption of the education system to large and small businesses having to instantly pivot from office to work-from-home settings. Technology requirements for the remote workforce were defined during the first half of 2020 with many businesses (despite declining revenues) investing in IT hardware and software in order to maintain business continuity.
2021 emerges with optimism underpinned by newly deployed vaccines along with incremental federal stimulus critically needed by thousands of ailing small businesses with high expectations for a strong turnaround by mid-2021. Below are a few thoughts surrounding overall IT spend along with priorities for both small and large enterprise businesses in the new year.
Overall IT Spend
While 2021 total budgets are likely to be down year over year due to lower revenues, IT specific budgets will potentially see a higher spend allocation tied mainly to supporting and securing the remote workforce. Operational changes made due to the pandemic will be big drivers of spend including refreshing of notebooks, tablets and other hardware devices along with an increased focus on remote level security. Companies will likely remain guarded relative to hiring during the first half of 2021 with dollars previously budgeted for new hires to be cut or redeployed for additional IT spend.
Datacenter Infrastructure Expansion
With added reliance and visibility due to the pandemic, datacenters are now being viewed truly as critical infrastructure. With the massive adoption of cloud based services, the excess capacity we once had has been depleted significantly; putting pressure on stalled existing and new development projects previously scheduled in 2020 to restart in 2021. Look for expansion and new construction of colocation and hyperscale datacenters coupled with a higher focus on renewable energy sources for sustainable cooling and power generation.
Large / Enterprise Business Likely Increase in IT Spend
2021 budgets for large and enterprise companies will likely increase versus small businesses due to the direct changes made in business operations supporting a large, remote based workforce. Look for hardware to remain a large part of the budget overall. However, sales of software, cloud and managed services will continue to increase due to the core operational changes made and the need for increased security measures supporting the new remote based model. Companies will likely look to augment their own security resources through increased engagement with managed security service providers (MSSP).
Small Business Doing More with Less
Looking closer at small business, here are a few data points; there are 31M small businesses in the U.S., employing nearly 60M people, and driving nearly half of the U.S. economy. For small businesses, 2021 is about stabilization and recovery. Look for small business spend to be less overall than in 2020 - but spend mix will likely change with increases in cloud and managed services enabling more cost effective and scalable resources to help augment their limited infrastructure. Small business will continue to focus on doing more with less until the recovery is well under way.