An Insight into the Technology world.
Analysis and Insight from Savvycom Team.

It didn’t take long for the optimism of a new decade to wear off. Since the beginning of 2020, companies everywhere were reeling as they reckoned with the effects of the COVID-19 pandemic. Sadly, the impact of the virus was too much for many firms, leaving millions of workers unemployed and driving thousands of businesses to close their doors. Those companies that stayed afloat had to act quickly in order to enable their remote workforce and maintain operations. Heading into 2021, there is little precedent for projecting the future. The economy is showing some signs of stability, but there are lingering fears over continued challenges or further surprises. The technology landscape is certainly going to change and we will dig deeper to see how much the world has affected it.

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Through all the confusion, though, there are still some basic concepts that will shape the year to come. Digital operations are more important than ever, with many transformative changes accelerating over the past year. The influence of technology is massive, forcing new approaches to regulatory behavior.

As the industry emerges from a chaotic year, it will begin a rebuilding phase, but this rebuilding goes beyond restoration. There is little opportunity to return to the old way of doing things. Thanks to changes that no one would have wished for and fueled by the requirements of a digital society, the technology industry will doubtless take a new shape in the coming year. Here are some trends that C-suite shall pay attention to strengthen their businesses.

 

Technology landscape is going to follow a consistent development

In 2020, the global information technology industry took a small step back in terms of overall revenue. As of August 2020, the research consultancy IDC was projecting global revenue of $4.8 trillion for the year. While the tech sector fared better than many other industries during the pandemic, it was not immune to cutbacks in spending patterns and deferment of major investments.

Moving forward, IDC projects that the technology industry is on pace to reach $5 trillion in 2021. If this number holds, it would represent 4.2% growth, signaling a return to the trend line that the industry was on prior to the pandemic. Looking even further into the future, IDC expects the pattern to continue, estimating a 5% compound annual growth rate (CAGR) for the industry through 2024.

The US is the largest tech market in the world, representing 33% of the total, or approximately $1.6 trillion for 2021. However, despite the size of the U.S. market, the majority of technology spending (67%) occurs beyond its borders. Spending is often correlated with factors such as population, GDP and market maturity. 

The bulk of technology spending stems from purchases made by corporate or government entities. A smaller portion comes from household spending, including home-based businesses. With the blurring of work and personal life, especially in the small business space, it can be difficult to precisely classify certain types of technology purchases as being solely business or solely consumer.

There are a number of taxonomies for depicting the information technology space. Using the conventional approach, the industry market can be categorized into 5 top-level buckets as the following diagram. 

key-categories-of-the-technology-industry-savvycom

>> Read more: IoT Challenges – What are the greatest and How to deal with? <<

The allocation of spending on each category will vary from country to country based on a number of factors. In the mature US market, for example, there is robust infrastructure and platforms, a large installed base of users equipped with connected devices, and available bandwidth for these devices to communicate. This paves the way for investments in the software and services that sit on top of this foundation.

Tech services and software account for nearly half of spending in the U.S. technology market, significantly higher than the rate in many other global regions. Countries that are not quite as far along in these areas (such as Vietnam) tend to allocate more spending to traditional hardware and telecom services. 

Building out infrastructure and developing a broad-based digital workforce does not happen overnight. Scenarios do exist, however, whereby those without legacy infrastructure – and the friction that often comes with transitioning from old to new – may find an easier path to jump directly to the latest generation of technologies.

On the upside, technology firms are planning to capitalize on the ongoing digitalization of business, whether that is expanding engagements with their current customer base or reaching into new segments. Additionally, technology firms are applying lessons learned from a challenging year and placing the spotlight on their internal operations, including sales and marketing efforts.

The enormity of the industry is a function of many of the trends discussed in this report. Economies, jobs, and personal lives are becoming more digital, more connected and more automated – a trend that is only accelerating after recent events. The platform for computing has become much more stable, with access to technology no longer limited by location or constrained to certain activities. As a result, more energy is pouring into creative solutions, further expanding the opportunities for both IT professionals and IT channel firms. 

The Business Of Technology Positioned For Greater Influence

Companies in the business of technology (the channel) are also facing a host of opportunities, challenges and changes in the year ahead. 

At a general level, many things haven’t changed for the channel. Technology and the business of selling it continues to grow more complex. What was once a fairly stable set of infrastructure products in a channel provider’s portfolio has, in the cloud age, morphed into myriad choices around software-as-a-service applications, data tools and a stack of emerging technologies. 

Looking ahead to 2021, firms that manage to thrive will be making investments in employee skills training, expanding their market reach to new customers and verticals, partnering with potential competitors, and embracing emerging tech. 

To ensure positive growth in 2021, channel firms are first looking to rely on what they already have. According to a recent research, the #1 factor that will possibly move the needle optimistically next year is a pick-up in business from existing clients. This makes sense in the current economic climate where finding new customers may be challenging, considering that many of the SMB customers the channel targets have been existing in cost-cutting or frozen-budget mode during the pandemic. 

That said, mining existing customers for additional revenue rings especially true with managed services providers for whom upselling additional types or tiers of services is often the key to growing revenue and profit margin.

Other areas where firms place value include reaching new customer segments. Opportunities there range from enticing new clients with any of the emerging technology solutions on the market to offering up a specialization in a particular industry vertical.

The effect COVID-19 has had on business in the channel is undeniable, with roughly half of companies reporting some downside impact in the past year. Smaller firms are more likely than larger to have been affected, given that their customer base also tends to be in the SMB space, a demographic most negatively hurt by business lockdowns and restrictions on capacity.

However, a study by McKinsey also shows that the pandemic has accelerated digitalization efforts by many companies, especially as they relate to interactions with customers. This phenomenon, along with the aforementioned need to support the shift to remote work, provides some clear avenues of opportunity for channel firms looking to assist customers in these efforts.

>> Read more: How to save your business from the Coronavirus <<

Budget Allocations Takes Technology As Central

One of the key questions to think about heading into the technology landscape of 2021 is how to budget. More than last year? Less? The same? Given the volatility of 2020, annual budgeting is a top of mind issue for many channel firms as they attempt to forecast sales, ponder new markets, or fight to keep their business afloat.

Interestingly, 31% of channel firms feel that the budget for tech support within their organization is too low. 

This is somewhat puzzling given that these are technology firms whose presumed mission is to provide support, technical advice and consulting to customers. One would assume this would be a highly funded area. It’s possible that these responses reflect the impact of job cuts due to the pandemic, or, more positively, are indicative of a rise in customer demand that has pinched tech support teams’ capacity, leading to a call for more headcount or other resource help.

Along with budgeting comes the human factor: staffing, skills gaps, etc. Despite current pandemic conditions, many channel firms are nonetheless on the hunt for new employees, particularly those with skills in certain areas such as emerging tech (IoT, AI, etc.) as nearly 4 in 10 firms report having current openings they are actively looking to fill in technology roles.

That said, the technology focus, and type of customers served will greatly influence the staffing needs of the typical channel firm. For example, a managed services provider may well need more tech staffing knowing that a majority of its customers are working from home instead of a central office location. Other companies are grappling to fill staffing holes because some of their employees needed to leave the workforce to tend to school-age children at home during the pandemic. This may lead to a surge in demand for outsourcing and solution provider services.

>> Read more: Vietnam – IT outsourcing heaven for tech dominants <<

Employee technological skill focuses go at a deeper level

Human factors as mentioned are a core concentration which will have a big impact on the landscape of technology in 2021. With that, the IT workforce will keep evolving from a heavy focus on infrastructure and generalists into a diverse world of specialists spread across 4 pillars: infrastructure, software development, cybersecurity and data as the pillars supporting IT operations. The details are carefully researched and reported by CompTIA:

1. Infrastructure

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Most companies look to be getting back to the infrastructure basics in the year ahead. This has been true in the past as well, but this year the demands around fundamental pieces are even more pronounced given the focus on resilient systems. As companies place more of their IT architecture in the cloud and consider new options for their workforce, networking performance becomes more critical. 

Other backend components such as server administration and storage are also part of a broader modernization of the IT building blocks. Nearly half of all companies are placing focus on first-line support, proving that the help desk has still not become a commodity in an age of outsourcing and end-user tech savvy. Although the emerging area of IoT was not a major priority last year, it still takes a small step back as companies concentrate more on core operations and less on advanced techniques.

2. Software Development

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Whether dealing with internal stakeholders or external customers, companies continue to emphasize user experience. The app approach that became widespread with the explosion of mobile devices redefined expectations around software usability, and many companies are still climbing the learning curve. 

The need for quality assurance is tied to the speed of development cycles, as organizations are trying to accelerate their processes without disrupting workflow. This acceleration leads to an overall focus on DevOps, which sees a significant increase in attention over last year. Although infrastructure projects may command more time and energy in 2021, the general direction will be toward more investment in software development for customization and automation. 

As companies build out their software capabilities, they will drive more interaction between software development and infrastructure operations. The lack of focus on AI and mobile development is less due to a shift away from long-term projects and more due to the fact that many companies do not need these specializations as core competencies.

3. Cybersecurity

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Cybersecurity is possibly the most complex of the 4 pillars, covering expanded defenses that companies must build, innovative approaches to proactively test those defenses, and internal processes that create secure operations. It is somewhat surprising to see such a high focus placed on compliance for the coming year. 

While the technology industry is heading toward more regulation, many companies have been somewhat slow to fully embrace compliance processes. Workforce education also moved up in the list of priorities. 

New concerns that stem from a remote workforce have been a primary trigger for both security awareness education and security investments. Risk analysis, cybersecurity analytics, and penetration testing are all areas that need improvement as companies adopt a zero trust mindset. Cybersecurity metrics rank lowest for the coming year, which signals the ongoing challenge in bridging the gap between cybersecurity best practices and business health.

4. Data

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The field of data is not set up to be a dedicated function as often as cybersecurity, but it is still a field where businesses are trying to establish comprehensive policies and management. Database administration is still the top focus area heading into 2021, as many companies continue to move away from spreadsheets and other simplistic forms of data management. The emphasis on data management and policies shows that businesses are beginning to take a more comprehensive approach to their data, which in turn will drive more specialization. 

While data visualization and predictive analytics have relatively strong demand, those areas are still difficult to tackle without a holistic data management strategy. As far as cutting-edge technologies, distributed ledgers such as blockchain have tremendous potential, but there are still hurdles in implementation and the technology will most likely remain a degree separated from most end users. The Technology Landscape from the start can be identified as inconsistent since many factors are going to changed or somewhat need to be discarded completely so that new ideas can come into life. 

 

In case you are looking for a partner that has those critical skills to leverage your 2021 tech initiatives, feel free to contact us – a tech consultant who has been in the industry for 11 years and has been verified for a creative mindset, strong commitment, and outstanding skills. We promise to not only deliver the best social app ideas to accelerate your business but are also capable of translating those initiatives into a seamless and competitive final product. 

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