Pipeline preview: The COVID-driven IT spending bonanza is over. What now?

The 2023 calendar year got off to a somewhat jittery start for the IT industry, with more mass job cuts announced by global technology companies, followed by the collapse of Silicon Valley Bank and continued economic uncertainty.

To explore the ramifications for IT spending and Australian IT partners, we spoke to Trevor Clark, research director and founding partner of Tech Research Asia. Clarke will be the keynote speaker at CRN Australia's Pipeline conference in August where he will examine IT and digital spending drivers and market trends for Australian channel partners.

He noted a shift in business priorities in the last 12 months.

In his view, businesses were focussed in previous years on top line growth, such as new digital products and services, increasing customer footprint, going into new markets or trying to get more share of existing customers’ wallets.

“But that's really flipped very quickly in the last 12 months in particular,” he said. Business’s focus now is more often on “bottom line on margins, on how much margin are you able to achieve.”

That’s driving a push for operational excellence. “How do we get more out of our current spending? How do we trim the fat, so to speak? Get rid of all the spending which we don't need and just be a really, really well-run machine.”

For some companies this might mean job cuts. For others it might mean greater focus on automation. But interest in innovation remains, Clarke pointed out.

“That whole generative AI explosion that's happened in the last few months in particular has really highlighted that people are still very, very keen on creating new things and doing things in new ways and using tools in different ways.

Cost management has crept back up to the top of it leaders’ priority lists.

“A few years ago, you would've seen cost management and IT budget management always be a top one, two or three priority - whether that's business priorities or whether it's technology management priorities,” Clarke said.

“It has slipped away in the last few years because people were getting quite liberal funding in terms of being able to support remote working and all that sort of stuff, and that shift to cloud.”

“But it has come back onto the radar as being a key concern or a key priority for people.”

“I think a lot of it at the moment is, ‘Let's get a little bit more smarter cost management in place - more around liquidity and making sure we've got the funds available to do things, particularly as it relates to capital investments, when you have some of the challenges with the cost of capital at the moment and inflation.”

The size of IT budgets hasn't generally changed much, from Clark's perspective.

“Budgets are relatively flat, maybe a minor increase and minor decrease here and there. There's very few organisations, unless they're really in trouble, that would want to be spending less on digital.”

Despite some softness in the market, Clarke doesn't expect it to continue for very long. And for channel partners that adjust to these trends, opportunities remain.

“It's not going to be a gold rush like it was during COVID for end user computing projects and remote support and that sort of thing. But there's certainly opportunities available in the market.”

Hear Trevor Clarke and IT buyers, vendors, distributors and channel partners speak about IT spending and market trends and opportunities at the CRN Pipeline Conference on the Gold Coast from August 22 to 25. See the Pipeline agenda and register your interest in attending.