Controlling technology spend during an epidemic
COVID-19 turned technology expense management on its head, as business resilience faced its toughest test when excessive spending was not an option.
COVID-19 ushered in an era of unfamiliar challenges and unexpected risks to businesses around the world. Sudden and sweeping lockdown measures introduced in South Africa aimed to limit the spread of the virus but virtually brought life to a standstill in the country.
The initial lockdown in 2020 wrought havoc on the local economy, which suffered a significant contraction during April, May and June of last year, when the country operated under widespread harsh restrictions.
Gross domestic product fell by just over 16% between the first and second quarters of 2020, shrinking the economy by a staggering 51%.
There may be nothing new about business disruption but as the ramifications of this pandemic ripple throughout the global economy, it is apparent that business resilience is faced with its toughest test ever, as companies scrambled to move from physical to virtual ways of operating.
COVID-19 continues to have serious implications for all commercial sectors, with some being hit harder than others.
At the outset, most businesses faced a sudden and urgent need for the deployment of massive quantities of mobile, voice and data connectivity in order to support the new remote working model − critical to business continuity.
This also had immediate and direct cost implications at a time when excessive spending was simply not an option. At our company alone, we onboarded 15 000 SIMs between April and June 2020, and in one instance, we onboarded 5 000 SIMs in a single day − something that typically has a seven- to 14-day turnaround.
These statistics serve to endorse the extraordinary disruptive force of the pandemic, with the potential for catastrophic cost implications for anyone trying to manage the financial fallout.
This is where technology expense management (TEM) has played, and continues to play, a crucial role.
Let’s contextualise TEM on a global scale. The total market for enterprise TEM, according to Hyoun Park, CEO and chief analyst at Amalgam Insights, including cloud and software, is currently over $3 billion as it manages the $2.5 trillion global spend on telecom, mobility, end-user devices, SaaS, PaaS, and IaaS.
The pandemic recalibrated technology spend, and as such, the TEM market.
This market includes a wide variety of players across telecoms expense, managed mobility, SaaS management, cloud management, master agents, service integrators and vendor financing organisations, all trying to solve similar problems of cost and service optimisation through a variety of technology, finance and service paths.
TEM is essential if businesses are to gain the necessary visibility and control of spending and inventory, as we convert back to a hybrid IT environment that will, unquestionably, not be the same as it was in 2019 or 2020, but will be a hybrid model, combined with the continued emergence of 5G, edge computing, APIs and specialised SaaS for business use, to name just some of the technology influences.
The pandemic recalibrated technology spend, and as such, the TEM market. COVID-19 has driven a major shift in businesses’ approach to technology and corresponding investments.
Deloitte’s 2020 Global Technology Leadership Study reveals that between 2016 and 2020, more than half of survey respondents reported year-over-year budget increases, while for others, budgets remained steady. However, this data was collected before COVID-19 sparked an unprecedented economic crisis that utterly disrupted short- and long-term business strategies.
The Deloitte study reports that COVID-19’s impact on technology spending requires nuance − although organisations made substantial cuts in spending in almost every category, they observed flat or increasing technology budgets in most companies. In fact, many technology leaders reported that the pandemic brought an opportunity to quickly recalculate technology investments, and in many cases, hasten existing investment plans.
How tech spending has changed
Prior to the pandemic, enterprises had planned to increase technology spending on average to 4.25% of revenue. Factors such as remote working have played a dramatic role as companies drive to support rapid transition to a distributed workforce.
The increasing demand for mobile applications, the growing adoption of portable equipment in multiple enterprises and technological advances in TEM solutions are driving the growth of the market.
Furthermore, increased adoption of mobile devices, visibility into expense management and the growing popularity of cloud-based services are also aiding market growth.
The ongoing trend of integration of individual mobile devices, such as smartphones, laptops and tablets, under mobility policies such as the choose-your-own-device and bring-your-own-devices transformed the market over the years.
Moreover, in response to changes in consumption patterns driven by stay-at-home orders, many businesses have increased spending on the digital technologies that drive e-commerce, telehealth, online learning, contactless payments and other online consumer trends.
Automation is being driven by workforce shortages, forcing businesses to seek opportunities to automate processes and reduce human involvement. The pandemic is also attributed with propelling significant investment in robotic processes, with many companies seeking to increase efficiencies and improve time to market.
The bottom line – and where TEM is concerned, we are literally discussing just that – is that TEM is a growing market sector for all the reasons cited in the foregoing, but the question is not why you should bother considering it, but rather how can you afford not to do so.
MD, Apex BI.
Buckley completed his studies in software support and PC engineering in 1999. He later went on to enhance his knowledge and skill through courses at the Harvard School of Business plus other institutions in the US.
He has two decades of experience in an ICT career that has seen him appointed to senior management positions across various functional lines of business, including enterprise, SME, partner and retail channels.
In 2007, he founded Apex BI. In the 12 years since inception, the company has attracted market share and has become a major player in the technology expense management sector. Apex BI is the only African company to be a member of the Enterprise Technology Management Association.
Buckley completed his studies in software support and PC engineering in 1999. He later went on to enhance his knowledge and skill through courses at the Harvard School of Business plus other institutions in the US. He has two decades of experience in an ICT career that has seen him appointed to senior management positions across various functional lines of business, including enterprise, SME, partner and retail channels. In 2007, he founded Apex BI. In the 12 years since inception, the company has attracted market share and has become a major player in the technology expense management sector. Apex BI is the only African company to be a member of the Enterprise Technology Management Association.