When the coronavirus had first hit the U.S. and other countries early last year, clobbering the economy and businesses, many technology investors could not have predicted the future which is today. With numerous job cuts, broken supply chains, and profit warnings, business models were flipped on their heads. However, with the ongoing vaccine deployment by nations throwing the worst behind us, companies have now started forming digital transformation strategies to recuperate from the crisis.
Predictions for 2021 are catalysed by the disruptive forces of the COVID-19 pandemic, which are expected to alter the fate of the global business environment for the near future.
“For future-fit IT leaders, the risks aren’t limited to the data center or network outages. Today’s risks include rapidly changing consumer trends that require digital pivots, increasingly complex security concerns, the ethical use of AI”, according to Brian Hopkins, an analyst at Forrester research.
While many businesses have been quick to realise the need for digitizing business processes their business models to survive, some are still making their way through. The rapid digitalization driven by the pandemic will continue into the recovery. The pandemic has been a testament to the fact that the ability to adapt and respond to any sudden shortcomings is a strong determinant to success in a highly digitalised economy. In order to reorganise business operations to align with the conditions the pandemic has left us with, organisations are re-strategizing their IT spending plans.
According to IDC, by the end of 2021, based on lessons learned, 80% of enterprises will put a mechanism in place to shift to cloud-centric infrastructure and applications twice as fast as before the pandemic. The pandemic-driven remote working environment has accelerated demand for cloud modernization and IT automation, leading companies to further investments in the space.
“We’ve seen two years of digital transformation in two months”, Microsoft CEO Satya Nadella.
The remote-work fashion has also handed fraudsters a new and very tempting field of play, leading to a surge in phishing and ransomware attacks. This has accelerated the need for the already booming industry of cybersecurity. According to Forbes.com, 55% of enterprise executives plan to increase their cybersecurity budgets in 2021 and 51% are adding full-time cyber staff in 2021, as companies invest to support remote working and a rapid move into cloud-based software services. The response to the crisis continues to press department budgets and limit resources for other less essential functions—a situation that we believe will direct investments in 2021.
The pandemic-led lockdowns have also affected consumer behaviour in ways that have and will continue to spur growth in the field of Artificial Intelligence. As consumers buy more online to avoid the new risks of shopping in stores, they are giving sellers more data on preferences and shopping habits. With the post-Covid 19 resurgences of investment in these sectors, many firms are seeking to significantly step-up investments in AI and Data. International Business Machines Corp estimates that only about 20% of companies use such AI-powered technology today, according to a report by Economic Times. But they predict that almost all enterprises will adopt it in the coming years.
The crisis led to many people working from their homes, which companies such as Zoom, DocuSign have benefitted from. Forrester expects remote work to will rise to 300% of pre-COVID-19 levels. The circumstances, however, worked wonders for some technologies and helped create a frothy market for initial public offerings and technology M&A that should extend well into this year. Riding on the remote working environment, Salesforce agreed to buy fellow software company Slack for an eye-popping $27.7 billion, highlighting how important Slack’s workplace-collaboration technology has become. With consumers staying indoors, the demand for food delivery services has also exploded. DoorDash, which popped more than 80% in its IPO, valuing the food delivery company at $71.3 billion, was one of the biggest food delivery market debuts. A number of big Silicon Valley companies, including Palantir Technologies Inc and Snowflake Inc, also had blockbuster IPOs, riding on a stock market rally in the second half of the year that was fueled by stimulus money and hopes of an effective COVID-19 vaccine.
Actions adopted to drive digital journey by adoption of technologies due to the pandemic are expected to further spur M&A in the field of cloud, AI, cybersecurity, data analytics.
With 52% of executives who pursued digital technologies via M&A saying that the approach exceeded expectations and 45% reported similarly for digital partnerships, 2021 is set to see an increase in deals, corporate venture capital, and partnership investments, according to a report by EY.
As always, entrepreneurs who lead their companies to make the right investments and build strategic partnerships during times of crisis have emerged stronger, through increased access to capital, large global clients, and delivering digital products and services that disrupt the market in a still-uncertain economy.