Breaking Analysis: CIOs Report a Cautious Outlook for Q4 Tech Spending

Breaking Analysis: CIOs Report a Cautious Outlook for Q4 Tech Spending

As we reported in our last update, tech spending overall continues to be significantly muted relative to 2019– CIOs Report a Cautious Outlook for Q4 Tech Spending. We currently project a 4 to 5 percent decline in 2020 spending and a tepid 2 percent increase in 2021. Nonetheless, there continue to be some sector and vendor bright spots in an overall challenging market.

In this week’s Breaking Analysis we welcome back Erik Bradley from ETR to provide added color to these scenarios.

Summary of ETR’s Survey Findings

The following narrative provides a brief overview of the most recent October from more than 1,400 CIOs and technology buyers in ETR’s latest sample.

The best news at the macro level is the rate of tech spending declines are compressing heading into Q4 2020. In other words, sequentially, the spending outlook for Q4 is “less bad” than it was in Q3. IT buyers remain cautious and uncertain based on numerous factors accentuated by the U.S. presidential election and of course the continued situation with the coronavirus.

Nonetheless, buyers are adapting to the “New Abnormal” and adjusting business models accordingly. Evidence is seen by the reports from CIOs of a reduction in expected layoffs, hiring freezes and IT project freezes.

While the macro picture is not pretty, several sectors and vendors continue to perform extremely well. Notably, Snowflake, Automation Anywhere, UiPath, Google, Zoom, Redis Labs, AWS, Okta and Databricks show elevated Net Scores (spending momentum) near or above the 50% level. Moreover, spending on Kubernetes-related initiatives remains extremely strong. This is in stark contrast to some of the more  challenged names including Teradata, Dropbox, DXC, Rackspace, Veritas, Wipro and Iron Mountain and Polycom who all show Net Scores at or below 0% – ..