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Any “COVID-19 Bump” in Digital Workplace Spending May Be Hamstrung By Economic Impact

by Craig Roth  |  March 18, 2020  |  Comments Off on Any “COVID-19 Bump” in Digital Workplace Spending May Be Hamstrung By Economic Impact

Digital workplace vendors have expressed a surge of interest in their product due to the sudden increase in remote work forced by the coronavirus (COVID-19).  Does that mean a short term bump in revenues for vendors of web conferencing, virtual collaboration, of cloud-based content management solutions?  Don’t jump to the conclusion that it will since there are two offsetting assumptions.  I don’t purport to have a forecast or answer in this blog post, but I do want to lay out these two assumptions.

Increase in Remote Work

The first is that a sudden increase in remote work benefits technology providers of remote work solutions.  That seems rather obvious, particularly to those tech providers.  The proportion of overall spending on remote work technology will increase as money is shifted (perhaps from elsewhere in the IT budget or even outside of IT) in their direction.

Decrease in Available Market

But the second is that the total available market is expected to shrink at the same time.  Overall GDP may decrease from a few tenths of a percent to much more. And, more importantly, the decrease may be especially severe in certain industries such as transportation, hospitality, and retail. A generic company may be more interested in a product that enables high quality remote meetings, but if that company happens to be an airline they are unlikely to spend and may even remove licenses if their business decreases. These products tend to be licensed month-to-month as SaaS so spending can be cut rapidly in response to poor economic conditions.

The Known Unknowns

There are too many unknowns right now to attach numbers to these assumptions.  We don’t know how severe COVID-19 will turn out to be, how hard industries will be hit (and how much governments may step in to soften the blow), and how quickly the spike in interest in remote working solutions will convert into revenue.

And this is all a short term analysis.  We also don’t know in the long term the timing and degree to which these industries will bounce back.  And whether this demonstration of the value of remote working as part of contingency planning will result in longer term commitments or whether companies will quickly revert to their old ways as soon as the danger passes.

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Category: digital-workplace  digital-workplace-applications  driving-digital-business-transformation-for-industry-leadership-it  

Tags: coronavirus  

Craig Roth
Research VP, Tech and Service Providers
7 years at Gartner
28 years IT industry

Craig Roth is a Research Vice President focused on cloud office suites, collaboration tools, content management, and how they are being impacted by digital workplace and digital business trends...Read Full Bio




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