How coronavirus is impacting tech, according to major IT analysts

While there is a great deal of information around COVID-19 out there, often it is the analysts that provide some of the best info and advice. We take a look at the virus through the lens of Forrester, IDC, and Gartner.

As the coronavirus pandemic continues to spread internationally, the scope of its impact has been incredibly varied.  While, of course, the health and safety of people around the world is of utmost concern, the severity of COVID-19's impact on private industry and the global economy cannot be understated.  As supply chains are heavily disrupted, consumer confidence dwindles, and a massive amount of market uncertainty persists, almost every industry is likely to feel the heat in one way or another.

While some industries might be worse off than others, COVID-19 has not left tech unscathed in any sense, both on the consumer side as well as within enterprise segments. Big tech has been suffering somewhat publicly from coronavirus-related issues, with many shutting down their physical China-based (and beyond) operations and experiencing major disruptions to their Chinese hardware supply-lines.

Massive tech conferences, such as Facebook's F8 or GSMA's Mobile World Congress (amongst many, many others) have also been cancelled or postponed, which have run-on effects for major vendors and smaller IT services companies who spend big money to showcase their wares. This issue is becoming worse every week and now has an immediate price tag exceeding (USD) $1 billion.

However, while many technology organisations and vendors (such as those within telecoms or networking) have put forward their takes on the extent of COVID-19, often it is the big IT analysts whose opinion we hold in the highest regard, and they have also joined the conversation in a variety of different ways.

While some focus on how coronavirus is affecting the big technology providers themselves, others have focused more on what all organisations can do to combat any business disruptions while leveraging technology. We take a look at what some of the heavy hitters are saying below.

Forrester predicts varied impacts while tracking employee experience

Forrester began talking about COVID-19's impact on tech relatively early, through its freely available ‘Insights' blog. On February 17th, VP and principal analyst Andrew Bartels compared the virus to the SARS epidemic, arguing that any economic or tech market impacts were likely to be short-lived and localised. Bartels said that as the direct effects of COVID-19 are relatively small compared to the flu, the bigger impact comes from the shutting down of economic activity out of China.

Bartels also predicted that demand for consumer goods like computers and communications equipment would experience delays, with recovery in Q2 and Q3 when quarantines are lifted. He clarified that while all tech market segments are likely to see this pattern, bills for SaaS offerings and telecom services, and outsourcing will continue to be paid. Where individual regions are concerned, Bartels said China's GDP was likely to drop, as the virus plays off the back of some pre-existing troubles for the eastern nation, with ‘bounce-back' growth in later quarters depending on how much worse the virus becomes locally, which will be largely reflected in its tech ecosystem.

On March 5th, Bartels penned another blog that talked about the effect of Coronavirus on tech budgets in the United States. Forrester already predicted a slowdown for US tech budgets growth from 4.5% in 2019 to 4.2% in 2020 and 4% in 2021. However, Bartels says their estimations could indeed have been too optimistic, given the spread of COVID-19.

As a result, Bartels recommends that CIOs and business partners should plan for modest increases in tech budgets but prepare for cuts if needed. Having said that, Bartels says the coronavirus-related slowing growth in US tech spending varies greatly by industry and expects that, "strong job growth, rising wages, low interest rates, and low energy costs should keep US consumer spending on a growth path."

Most recently, Forrester have been tracking how employees have been experiencing the coronavirus outbreak, in relation to how their organisations are taking action and the specific concerns that they have. According to an update published on the 5th of March, 43% of respondents in the United States reported that hey have a plan to manage the risk of coronavirus. In describing why this might be the case, Forrester VP and group director Stephanie Balaouras says that many of the pandemic-level preparation plans developed by organisations during the swine flu outbreak about 10 years ago had never been updated or tested.

"In 2009/10 companies ramped up their pandemic plans and (then) just let them gather dust on the shelf. In a lot of companies, the individuals responsible for those plans are likely gone," Balaouras said.

"What's disheartening is, in the US we've had a couple of months of warning that this was likely going to be more than just a regional outbreak. In that time companies should have been dusting off those plans or they should have been creating plans to begin with."

A further update reveals that 53% of US workers are afraid of the spread of coronavirus and 29% of them are afraid to go to work due to risk of exposure. 45% also believe that their work life will be disrupted by the coronavirus, whether or not they come into direct personal contact with the virus itself.

IDC adjusts market forecasts

International Data Corporation (IDC) has adjusted its forecasts for many tech markets around the world, noting the impact of coronavirus.

The analyst slashed its 2020 IT spending forecast, as the firm expects a substantial slowdown in hardware and software services spending. It says that while hardware spending in H1 2020 will be particularly impacted, software and services spending will also be affected as the crisis reverberates through all sectors of the economy, including supply chains, trade, and business planning. It says overall, in a "pessimistic scenario" (which is still not worst-case depending on reassessments) IT spending is now likely to grow by only 1%, compared to its original growth expectation of over 4%, with a possibility of trending further down in the next few weeks.

"The situation is extremely fluid. Our monthly data and surveys are clearly pointing in one direction, but it's still early to understand the full impact of the coronavirus crisis across all sectors of the economy," says Stephen Minton, vice president in IDC's Customer Insights & Analysis group.

"Things are moving so quickly that we need to constantly recalibrate our assumptions and expectations, but the pessimistic scenario reflects an IT market in which weaker economic growth translates into weaker business and consumer spending across all technologies over the next few quarters. Things could get worse, but hopefully not."

IDC has also adjusted European ICT spending growth specifically, revising forecasts from 2.8% to 1.4% in the most probable IDC European research scenario. IDC notes a "substantial impact" of COVID-19 on European tech, accelerating the impact already felt in Asia. While it notes, once again, that the situation is "extremely fluid", it expects half the previously predicted regional ICT growth as, "the crisis seeps into virtually all European economies.

As a ‘probably scenario', it considers a situation where the virus is broadly contained over the next few weeks. However, if this is not the case, it forecasts a "pessimistic scenario," where growth falls to a near-flat 0.2%. It says this would be caused by a series of domino effects, including oil price changes, currency depreciation, the inability of governments to make timely payments, delays in the supply chains and lay-offs in both public and private sectors.

The analyst recommends that all tech leaders recalibrate their strategies, with use cases of patient care and customer, citizen, student, or employee experience and proximity to see accelerated adoption of digital solutions. It also notes that impacts on the software and telecoms markets in Europe are less evident and some positive factors are expected to negate - to a large extent - the natural downturn. 

IDC has also documented COVID-19's possible effect on African and specifically East African smartphone growth, which have previously been thriving under a vibrant distribution network and high demand. Where East Africa is concerned, IDC anticipates a ‘probably' scenario where shipments decline 12% QoQ in Q1 2020, with a further 3% drop in Q2 2020. It then expects to see a recovery in Q3 and Q4 if the virus is contained and supply chains return to normal.

While Africa has proportionately not been as heavily affected by the virus as other regions, its smartphone supply is made up predominantly (85%) of Chinese brands like Huawei, Techno, Itel, Oppo, and Xiaomi, with many other sourcing components from Chinese suppliers.

Gartner gives guidance to CIOs

Gartner have outlined a range of initiatives and focus points around COVID-19, with many recommendations aimed directly at CIOs. In a March 6th post on its ‘Insights' page, the institution wrote that CIOs should immediately look to expand access and capabilities across two "high-priority" areas of digital workplace resources and digital technologies.

"The value of digital channels, products and operations is immediately obvious to companies everywhere right now," says Sandy Shen, senior director analyst at Gartner. "This is a wake-up call for organizations that have placed too much focus on daily operational needs at the expense of investing in digital business and long-term resilience. 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."

In bolstering access to digital assets, the analyst says a process can be followed that includes; taking stock of who can work from home and how they do it, identifying security needs and infrastructure, updating remote working policies and management, and proving new/scaling existing digital capabilities (i.e. videoconferencing, messaging, document sharing etc.) and network capacity. In terms of specific technologies, it highlighted self-service and digital sales technologies such as chatbots and interactive voice response (IVR) systems, new remote experiences such as B2B sales/client teleconferencing, and shifting sales priorities to adapt to demand.

In a March 10 press release, Gartner outlined three immediate actions that CIOs need to take if they want to increase their firm's resilience against disruptions and prepare for rebound and growth. The first is around increased investment in digital collaboration tools with security controls and network support, to account for remote working. For organisations without established remote working capabilities, Gartner says CIOs need to work out interim solutions in the short term.

These solutions include identifying use case requirements such as instant messaging for general communication, file sharing/meeting solutions, and access to enterprise applications such as enterprise resource planning (ERP) and customer relationship management (CRM), while reviewing all security arrangements to ensure secure access to applications and data. The analyst also said that firms should carry out workforce planning to assess risks and address staffing gaps, such as identifying mission-critical service areas. It says AI can be useful here, automating tasks such as candidate screening and customer service.

The second focus area, Gartner says, is around shifting customer and partner engagement to digital channels, whilst maintaining sales activities. It says many organisations, such as branded sites and apps, online marketplaces and social media, already carry out customer/partner engagement digitally and these capabilities should be adopted by wider enterprises. The analyst reiterates that organisations should also enable customers to use self-service via online, mobile, social, kiosk and IVR channels.

The third action is around establishing a ‘single source of truth' for employees. This step is essentially about ensuring that only the best, most accurate data is used to support decision making, with transparency and accurate guidance offered to employees.  

"Organisations can offer curated content, drawn from internal and external sources, to provide actionable guidance to employees. These sources include local governments, healthcare authorities and international organisations, such as the World Health Organization (WHO). HR and corporate communications leaders may be involved to vet the content and interpret the company's policies," Shen adds.

"Organisations should set up a site, app or hotline to share this information on a regular basis. Employees can also use these platforms to notify the company about their health conditions and seek emergency support and care services."

Most-recently, Gartner published its ‘10 pillars of pandemic preparation', which involves things like establishing pandemic frameworks, active situation monitoring, financial reviews, extending workplace hygiene protocols, and business impact reviews.