Ah, another day, another headline teasing a potential recession and a budding trade war.
IT leaders have been taking note of the ongoing volatility and are starting to batten down the hatches, according to an IDC webinar hosted on April 16 that shared how business and IT leaders in the US, Canada, and Mexico are navigating escalating uncertainty in the market.
On edge. At the end of 2024, IT leaders queried in IDC’s monthly surveys were set on improving data centers, application bases, and overall cyber resiliency.
“Modernization was our word of the year,” said Rick Villars, IDC’s group VP of worldwide research, during the webinar. “We were going to improve our applications. We were going to improve our ability to use our data.”
However, March survey results from the same queried CIO community show that IT professionals are now marching to a different drum. Just under one half (47%) of US IT leaders said that they felt geopolitical uncertainty was a top risk for their organization’s spending and tech strategies.
Still, IT leaders are rolling with the punches. A whopping 54% of surveyed US IT leaders said they would increase IT spending to achieve their objectives, with 38% planning to “aggressively” seek to renegotiate existing contracts.
The new normal. Stephen Minton, group VP of IDC’s data and analytics group, said that 2024 was like a “perfect wave” because of its stronger-than-expected economy. However, a fluid trade war makes for a lot of unknowns in the near future.
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“The reality is that CIOs who don’t want to cut the IT budget will be getting that knock on the door from their CFO if business conditions do start to deteriorate over the next six months or so,” Minton said.
For that reason, Minton recommended IT leaders have a strong contingency plan in place to be able to ride the tide.
“The risks are higher [and] almost changing on a weekly basis,” Minton said. “That’s just going to be our reality for the next at least three months and probably longer.”
The million-dollar question. So, is IT spending recession proof? Minton said a historical look at tech spending during vulnerable economic cycles indicates that it might be.
“IT spending will be more resilient in a recession, if indeed we are heading into one, than it was in the past in those previous economic cycles,” he said.
Minton added that companies are more likely to “protect” their IT investments in the current wave of uncertainty because these investments will be integral to navigating the incoming “disruption.”
“Our industry is in a pretty good place, maybe the best place it’s been for years, which is good because we’re going to be tested,” Minton said. “We already are being tested.”