Cloud spending increased in Q1 2020, as COVID-19 spurred demand for collaboration

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Infrastructure spending on cloud grew modestly, while other spending plummeted by 16.3%, according to a new IDC report.

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As the COVID-19 pandemic ushered in a new age of working from home, organizations began to rely on technology that would support a workforce built around virtual collaboration, using tools like video conferencing and cloud platforms. And as COVID-19 continues to spread, these tech features will undoubtedly continue to be a staple of the “new normal” workplace.

New data from the International Data Corporation (IDC) Worldwide Quarterly Cloud IT Infrastructure Tracker details spending on the infrastructure for public and private cloud environments—including spending on server, enterprise storage, and Ethernet switch)—for the first quarter of 2020.  

The big takeaways from the report show an overall (but modest) increase on cloud spending (2.2%) and a major drop (16.3%) on spending for non-cloud infrastructure.

According to the report, COVID-19 was the primary variable that influenced cloud spending. The necessity of shifting to remote work, “increased demand for cloud-based consumer and business services driving additional demand for server, storage, and networking infrastructure utilized by cloud service provider datacenters,” it said. 

SEE: Cheat sheet: The most important cloud advances of the decade (free PDF)

Because of this, and the loss of profit for many organizations, private cloud infrastructure spending declined 6.3% while public cloud infrastructure spending hit $10.1 billion in 1Q20. However, the report also predicts that private cloud infrastructure spending will rebound, eventually ending up as a positive figure by the year’s end.

According to the report, cloud adoption will continue to grow through 2020 because of the “demand for more efficient and resilient infrastructure deployment,” and the investments on cloud infrastructure are predicted to hit $69.5 billion–representing more than half (54.2%) of overall IT spending on infrastructure. 

SEE: How to build a successful career as a cloud engineer (free PDF)

The IDC also offered long-term predictions on cloud IT infrastructure spending, expecting it to reach $105.6 billion by 2024, and representing more than half (62.8%) of total spending on IT infrastructure. It also predicts that while cloud infrastructure spending will be the main focus for infrastructure spending in the enterprise, non-cloud IT infrastructure will also recover this year,  but will end up in the negative, at -1.6%, by 2024.

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E-commerce spending in May 2020 greater than the entire 2019 holiday season

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The COVID-19 pandemic has shifted how people spend their money and the changes may be permanent, an Adobe report finds.

Paper boxes in a shopping cart.

Image: Getty Images/iStockphoto

Adobe Analytics has released its latest Adobe Digital Economy Index report for May 2020, finding that e-commerce sales in May 2020 alone eclipsed the entire 2019 holiday shopping season.

The reason for this massive shift is likely the COVID-19 pandemic, which has left countless people isolated at home. Since lockdowns began in March, e-commerce spending has exceeded expectations by more than $52 billion.  

In May 2020 alone, $82.5 billion was spent online, an increase of 77.8% over the same time in 2019. That means May exceeded levels of online shopping usually seen between November and December, and Adobe analysts say it’s likely to be a permanent shift.

“We’ve had three months to adjust to ‘the new normal;’ we are seeing signs that online purchasing trends formed during the pandemic may see permanent adoption,” said Taylor Schreiner, director of Adobe Digital Insights. 

SEE: Coronavirus: Critical IT policies and tools every business needs (TechRepublic Premium)

Another massive shift in shopping habits comes from buy-online-pickup-in-store (BOPIS) orders, which showed a year-over-year growth rate of 195% in May. Twenty-three percent of people surveyed by Adobe for the study said they now prefer using BOPIS and curbside pickup over delivery, which Schreiner said is due to the ease and convenience of store pickup orders. What was once a niche method of shopping, he said, is likely here to stay after pandemic shutdowns abate. 

The massive spike in online shopping has slowed with stay-at-home orders beginning to lift around the country and states that opened earlier, like Iowa, Florida, and Wyoming, have had slower increases in online shopping, though they’re still seeing increases despite brick and mortar stores being accessible. 

As for specific industries, electronics and clothing retailers have continued to see increases in online sales (by 11% and 12%, respectively) despite states reopening, while online sales of groceries declined by 14% in May. 

What these trends mean for businesses

Schreiner called the shift to predominate online shopping a new normal and that means businesses who make and/or sell products will be hard pressed to ignore online shopping. 

John Copeland, VP of Customer and Marketing Insights at Adobe, said that COVID-19 has changed business forever and current e-commerce trends are likely to continue. “Over the next couple of months, we will see an even bigger focus on experience-driven e-commerce, as the competition heats up where consumers are now putting so much of their attention online,” Copeland said. 

Despite the likelihood that e-commerce will continue to dominate in the post-pandemic world, there’s still room for growth for businesses looking to improve their online presence. “One in four consumers say that they’ve had a negative experience shopping online, over the past three months, suggesting retailers have an opportunity to improve their site experiences,” said Vivek Pandya, digital insights manager at Adobe.

If your organization has a small online retail presence, or it’s had complaints from users in the past, now is the time to fix the problems and grow. Failure to do so at this critical juncture could mean being left behind as the retail world shifts away from face-to-face purchasing and permanently to online e-commerce.

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