In a keynote speech today at the 2022 Channel Innovation Awards, IDC Canada’s Jason Bremner outlined the factors that will drive technology spending for both the short and long term and what the channel must do to achieve success.
Describing the past two years as “one massive social experiment,” Bremner, research vice president of the firm’s industry and business solutions analyst team, likened the peaks and valleys awaiting it to that which a long-distance cyclist must endure.
“Most of us have ridden a bicycle in our lives, and you can relate to riding on a flat road, but when you start to ride uphill, you have to pedal harder and harder,” he said. “Imagine riding a bicycle for 50 kilometers or longer. The impact of a tailwind or a headwind or a crosswind can make your ride much easier or much harder.”
Bremner chose to start with the tailwinds that are driving technology spending and helping the channel community in positive ways, key among them being the evolution of the “digital first” consumer over the past 24 months as a result of a pandemic.
What that has done is create insurmountable change.
“At the beginning of the pandemic, only 32 per cent of Canadian CEOs felt pressure to really embrace digital and complete a digital strategy in three years,” he said. “The pandemic demolished that sentiment and an IDC survey in January 2022 found that 69 per cent of CEOs in Canada say the pandemic forced their organizations to adopt the digital first strategy.
“This is why we are seeing more spending on digital commerce applications, collaboration software, security and other technologies, so it is no surprise that 92 per cent of Canadian CEOs plan to maintain or increase technology spending in 2022.”
Another positive is the impact of increased technology budgets among all levels of government, as well as education boards and health care providers, he added.
As for the headwinds, they revolve around budgeting and what companies are investing in when it comes to their overall IT budget.
While many organizations made technology investments in the past two years to address the unique needs of the pandemic, those investments did not end in 2021, said Bremner.
Also, “according to an IDC Canada survey during the pandemic, roughly 60 per cent of tech budget spending is going towards or was going towards day-to-day business operations, and I’d expect that to increase in 2022 as COVID related investments become part of our daily operations.
“This is because many organizations are still dealing with technical debt, and technical debt has increased over the pandemic because the technologies that we invested in were not integrated with our legacy technology.”
Other headwinds include:
An overall lack of skilled talent, particularly in areas such as security, the cloud and analytics. As an example, a recent IDC study, revealed that digital transformation or DX projects have been delayed by as much as 35 weeks on average due to staffing shortages.
Rising tensions between nations, such as the invasion of Ukraine by Russia, which “will slow technology spending as supply chains and international operations are affected.”
There are also crosswinds that channel partners must contend with, and these can be “problematic because they have the potential to knock you off course and allow your competition to move ahead.
“One of the crosswinds we see is changing societal norms. We see consumers and businesses more interested in in organizations who can balance making a profit with having a purpose. We are seeing more IP contracts include clauses like ethical sourcing, accessibility and diversity and inclusion.”
The channel, said Bremner, “may be wondering if this applies to Canada, and does it affect my business? It may be more common in other countries, but we are already seeing leading companies adding some terms and conditions in these areas into IP contracts.
“And governments are introducing policies to provide opportunities to suppliers owned by Indigenous peoples, women and minorities. You can expect this crosswind to affect your business in the near future.”
In order to thrive in this quickly changing environment, he said, IDC “believes future enterprises will require a new type of technology supplier, one that is innovative and helps their clients become more innovative. A supplier that is a critical thinker and scrutinizes how to apply technologies to use cases to enhance business processes.”
“In conclusion, we think if you target the high growth areas, align your to your clients’ future enterprise needs and become the partner of the future, you will find the growth opportunity in the Canadian market in 2022 and beyond.”