Wallet 2021: Different dots, same picture

What is that men hide, and women show? Well, you just need to look where your money is, and you would know. A woman would always carry her purse or handbag in a visible way. A man would have his wallet tucked properly in a pocket. But when it comes to the IT wallet, it is a mystery, no matter what gender or vertical the CIO belongs to. A lot of factors, some totally non-IT-related, can affect the weight and place of this wallet.

The year has begun and guesstimates have started emerging on how heavy and different the IT wallets in India are going to be this time. Let’s see if we have a pattern already.

Cloud, the magnet for IT copper –no surprises here

We have all been witness to the speed and pervasiveness with which businesses embraced remote working, digital models and hybrid processes during the ongoing pandemic – hinting at the continued momentum towards spending on cloud and adjacent services/solutions.

The latest analysis by 451 Research points out that the Cloud Computing-as-a-Service (CCaaS) market in India will maintain solid growth, exhibiting a compound annual growth rate (CAGR) of 15% from 2019 to 2024. The research report attributes this growth to reasons such as deliberated government support, positive investment climate, thriving ecosystem of technology vendors, and growing interest among the digital enterprise. Interestingly, in 2019, the market for CCaaS in India stood at USD 873 million, growing at a projected rate of 23% YoY in 2020, which is expected to slow down to 11.3% in 2024.

Meanwhile, the Platform-as-a-Service (PaaS) segment would show moderate growth throughout the forecast period of 2019-24, with a CAGR of 10.2%. The shift towards the cloud has also shown ripples in the Infrastructure-as-a-Service (IaaS) space – revenue here is expected to exceed the USD 1.2 billion mark by 2024 (fuelled by a CAGR of 16.3% throughout the forecast period of 2019-24). Similarly, cloud archiving, cloud backup and disaster recovery are also feeling the trajectory’s effect and the cloud Storage-as-a-Service market could peak by 2022.

The enterprise information security and risk management end-user spending in India is likely to touch USD 2.08 billion in 2021, an increase of 9.5% from 2020, as per a recent forecast by Gartner. Here, cloud and integrated risk management will register the highest growth in 2021, up by 251% and 27.8%, respectively. Application security will show a growth of 4.2% (against 1.9% in 2020) and data security would mark a growth of 16.6% (in comparison to 9.4% in 2020). In addition, other information security software that saw a negative growth of 0.8% in 2020 is expected to pep up and reflect a positive growth of 3.8%.

Analysts explain that security leaders had to cut down on their security spending in 2020 because of IT budget cuts. The trend, however, is reversing in 2021. It looks like the pandemic gave a fillip to this shift as organisations moved to the cloud for getting closer to cost efficiency and business continuity. Prateek Bhajanka, the senior principal research analyst at Gartner, explains, “Enterprises may have been cloud-averse or cloud-uncomfortable to some extent before. Security was galvanised around the data centre. But now it has moved beyond the physical realm of servers. Now it has to come into action in the coffee café where an employee opens the laptop for a meeting. Space has become hybrid and remote and that is creating big changes for security architecture and approaches.”

Gartner also forecasts IT spending in India to reach USD 88.8 billion in 2021 (up by 6.8% from 2020). In 2020, it had dropped by 2.7% as CIOs prioritised mission-critical technology and services. The worldwide IT spending, in comparison, is expected to touch USD 3.9 trillion in 2021 (up by 6.2% from 2020).

NTT’s 2021 Global Managed Services Report echoes these shifts. It underlines that the pandemic has brought about a huge change for many, and enterprises in APAC will continue to broaden their investments in digital transformation. The keyword is that it will manifest in spite of what has happened, not because of it.

From business coffers to business coffers

Another point worth noting is that a lot of these spends would find a new level of gravity and interest in the boardrooms. IT spends have ceased to be back-burner topics or necessary evils. They are being discussed in a new language and with newfound respect.

Agatha Poon, the Senior Research Analyst at 451 Research, distils that the pandemic has prompted companies, large and small, to reinvent their operations and embrace agile models for business resilience. “While the implications of the pandemic vary from one industry vertical to another, companies in the retail, gaming, manufacturing and fintech sectors have been driving demand for big data, IoT and application migration use cases.”

Poon cites RBL Bank and Chai Point – one of the major tea chains with over 100 retail stores in India – as textbook examples. “Following the migration of key systems and custom apps such as ERP, CRM, inventory management system, point-of-sale system, centralised data aggregation and custom analytics system to Amazon Web Services (AWS) virtual private cloud, Chai Point has moved up the value chain by leveraging AWS’s IoT platform to provide a cloud-based beverage service called boxC.in, with IoT-enabled tea and coffee dispensers. Meanwhile, RBL Bank has collaborated with AWS to deploy Amazon WorkSpaces. The plan is to extend the remote working option to 1,000-1,200 employees in the post-COVID-19 era.”

In NTT’s report, what pops in a distinct spot is the way almost 40% of the APAC organisations agreed that the more they partner with a service provider to consult, strategise, manage and innovate all aspects of their transformation journey, the more likely they are to be bold and brave, pivoting focus to take advantage of new market opportunities. Almost 51.2% of the organisations in APAC averred that their overall technology strategy is fully aligned with their business strategy needs. About 46.7% know and agree that their organisation’s IT capabilities are only slightly effective when it comes to aligning with business objectives by exploring new technologies.

How much, how long?

The year 2020 might have been the push that these areas needed, but what if it turns into more of a nudge that is forgotten after the dust settles down. How many of these shifts in spending will continue and build up in 2021, 2022 and beyond?

Bhajanka augurs that companies are ready to master the situation in case another crisis or lockdown happens. “Indian organisations are now comfortable with the cloud and are re-architecting their security with data centre as a centre of identity and end-points as a centre of connectivity. Now identity is your perimeter.”

“Companies that have migrated production workloads to the cloud are striving for advanced automation to keep pace with changing business requirements. In essence, automation is an area where providers continue to benefit from relatively stable demand, as more and more companies move their offline businesses to the digital world for business agility and long-term viability.” Poon argues.

This would be a strong factor when we think of spends in new-age areas such as AI.

“Look at how the commercial use of AI is yet to reach mainstream popularity; some areas of AI such as robotic process automation (RPA) and chatbot are approaching an inflexion point in the local business market,” Poon reasons.

“Bank of Baroda, for example, enables chatbot-assisted digital interaction on its website using IBM’s Watson AI capability. The government of Andhra Pradesh provided COVID-19-related answers to citizens’ questions using an AI-enabled virtual assistant. Overall, despite a persistent economic slowdown, local companies seem to have an unabated focus on devising a game plan to further their digital strategies for long-term sustainability.”

So if 2020 was about fast-tracking projects that were on the shelf for long or about being brave in taking action on things that would have taken years of chewing over, 2021 could be about these projects and mindsets taking deeper roots. The way IT investments deliver business value and resilience is going to be a big filter ahead. The Queen in your organisation may have just shifted the side and position of her purse, after all. Take a cue.

By Pratima Harigunani