Survey: How the pandemic is shaking up the network market

According to a global survey of 2,400 IT decision-makers (ITDMs) commissioned by Aruba, IT leaders are now investing more in cloud-based and AI-powered networking technologies as business recovery plans take shape in response to the COVID-19 pandemic.

As IT leaders respond to the challenges associated with enabling a highly distributed workforce and the emergence of the hybrid workplace – with people needing to move seamlessly between working on campus, at home and on the road – they are looking to evolve their network infrastructure and shift away from CapEx investments towards solutions consumed 'as a service'.

The average proportion of IT services consumed via subscription will accelerate by 38% in the next two years, from 34% of the total today to 46% in 2022, and the share of organisations that consume a majority (over 50%) of their IT solutions 'as a service' will increase by approximately 72% in that time.

"With the emergence of the hybrid workplace, IT leaders are being asked to deliver a delicate balance between flexibility, security and affordability at the edge," says Aruba CTO and HPE senior fellow for Aruba Partha Narasimhan.

"Every part of the workplace needs to evolve: the campus must be embedded with technology to support social distancing and contactless experiences, and the home office must offer enterprise-level connectivity, security and support. It's increasingly clear that to support these new needs in a financially challenging environment, IT decision-makers are attracted to the reduced risk and cost advantages offered by a subscription model."

The report, which surveyed ITDMs in over 20 countries and eight key industries, looked at how they have responded to IT and business demands in the wake of COVID-19, what investment decisions are being made as a result, and the consumption models now being considered.

ITDMs report that the impact of COVID-19 has been significant both on their employees and short-term network investments:

• 22% described the impact on their employees as 'significant' (widespread furlough or layoffs), while 52% considered it 'moderate' (temporary reductions in some functions), and 19% 'low' (very few jobs impacted).
   
• 77% said that investments in networking projects had been postponed or delayed since the onset of COVID-19, and 28% indicated that projects had been cancelled altogether.
   
• 37% of ITDMs in education and 35% in hotels and hospitality globally said they have had to cancel network investments.

Future plans are aggressive, with the vast majority of ITDMs planning to maintain or increase their networking investments in light of COVID-19, as they work to support the new needs of employees and customers.

• 38% globally will increase their investment in cloud-based networking, with 45% maintaining the same level and 15% scaling back.  The APAC region was the global leader with 45% stating increased investment in cloud-based networking, rising to 59% among ITDMs in India. With cloud solutions allowing for remote network management at a large scale, these capabilities are particularly enticing for IT teams when being on-premises is not possible or challenging.
   
• ITDMs are also seeking improved tools for network monitoring and insight, with 34% globally planning to increase their investment in analytics and assurance, 48% indicating that they will maintain their level of investment and 15% reducing it. This allows IT organisations to troubleshoot and fine-tune the network more efficiently, as demands on it are augmented by a distributed workforce. 
   
• There is also an emphasis on innovative technologies that simplify the lives of IT teams by automating repetitive tasks. 35% of ITDMs globally are planning to increase their investment in AI-based networking technologies, with the APAC region leading the charge at 44% (including 60% of ITDMs in India and 54% in Hong Kong).

As ITDMs shape their investment plans, they are looking at alternative modes of consumption to achieve the best balance of value and flexibility.

• 55% globally say they will explore new subscription models for hardware and/or software, 53% managed services for turnkey hardware/software and 30% financial leasing – all as a result of the impact of COVID-19. This reflects the increased need for more financially flexible models in a challenging environment.
   
• Networking subscription models are more popular in APAC (61%) than in the Americas (52%) or EMEA (50%), and at a country level the highest demands are in Turkey (73%), India (70%) and China (65%).
   
• The industries most likely to be considering the subscription model are hotels/hospitality (66%), technology and telecom (58%) and education (57%). The impact of COVID-19 on IT behaviour has made the desire for flexibility and predictability in spending while reducing risk from initial capital costs, greater than before.
   
• In stark contrast, just 8% globally plan to continue with only CapEx investments. Across industries, 15% in retail, distribution and transport will continue to focus solely on CapEx investments, versus just 5% in IT, tech, education and telecoms, and 2% in hotels and hospitality.

"With the needs of customers and employees having changed so comprehensively in recent months, it's no surprise to see IT leaders seeking more flexible solutions," says Narasimhan.

"They are having to adapt fast and ensure that more complex, distributed networks can securely support the experiences users demand. The need for agility and flexibility in network management is now greater than ever."

While the pandemic has clearly negatively impacted ongoing projects, this research suggests it will also catalyse medium-term investment into advancing networking technologies, and a shift to more flexible models of consumption that limit up-front capital demands.

Trends that were already taking hold will now accelerate, including the move to the Edge and the adoption of cloud-based and AI-driven intelligent networks.