Do you accelerate IT spending before the end of the year or defer it, with economic uncertainty and a looming recession? J.P. Morgan analyst Mark Murphy revealed in the summer software market update 2022 (registration required), that more CIOs are deferring projects and delaying IT spend in the second half of 2022
How CIOs balance dwindling budgets
Almost 40% of CIOs surveyed by J.P. Morgan in June said that IT budget planning would include deferring IT purchases in the latter half of 2022, compared to just under 32% who said they’re likely to accelerate their spending.
A similar survey the company conducted found that 48% of Microsoft partners surveyed have seen or expect to see customers constraining their use of software. With more companies encouraging or ordering employees to return to the office, at least for part of the traditional workweek, it’s probably not a surprise that enterprise decision-makers who represent the installed base of collaborative software providers Zoom and Citrix are projected to see a decline in spending.
Oracle licensees are really tightening their belts
More surprising, perhaps, is that Murphy’s presentation showed Oracle customers’ IT budget planning included a mere 1% increase in their spending on that company’s products, compared to more than a 60% increase in spending for cloud data platform providers Snowflake and Microsoft.
Like other providers of perpetual enterprise software licenses, Oracle is racing to transform itself into a cloud software company. Where that would leave enterprises who rely on those perpetual licenses remains to be seen, but the J.P. Morgan survey indicates that CIOs who buy those licenses are tightening their belts and planning to make do with what they have.
A slowdown in IT spending was also reflected in an earlier TechCrunch survey noting that 2022 purchasing plans had declined from 8.7% growth expected in December to 6.7% this past May. “Our research shows that organizational plans to begin new IT projects have stalled since the start of 2022,” TechCrunch reported.
Demand for tech talent is accelerating
The spending slowdown and project deferrals do not appear to be having much impact on the demand for tech talent — the belt tightening is only aggravating the existing shortages. According to TechCrunch, “At the same time, the need for experienced IT personnel has accelerated and hiring demand in the space has reached the highest level we have ever seen.”
Even customers who are quick to move to cloud options often find they need to reshape expectations regarding the level of support they can expect. That can be distressing given the potential failure rate of cloud migrations; according to eWeek, “90% of CIOs have experienced failed or disrupted cloud-based data migration projects. Clearly, this is a massive undertaking that’s littered with hidden pitfalls.”
An alternate support services model may be necessary
As companies transition from traditional products to cloud, organisations not yet ready to make the transition need an alternate support strategy for vendors that cut investment in old product lines and shift resources to newer offerings. Faced with an ongoing talent crunch and uncertain how long they can count on vendor support, CIOs who intend to continue to maximise return on existing IT investments should explore support options from third parties.
Rimini Street, Inc. (Nasdaq: RMNI) is a global provider of enterprise software products and services, the leading third-party support provider for Oracle and SAP software products and a Salesforce partner. The Company offers premium, ultra-responsive and integrated application management and support services that enable enterprise software licensees to save significant costs, free up resources for innovation and achieve better business outcomes.
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