The State of Tech: Global IT Spending, Managed Services Market, and Cloud Migration Insights

[00:00:00] It's Monday, April 22nd, 2024, and I'm Dave Sobel.

[00:00:05] Three things to know today.

[00:00:07] The managed services market in the U.S. dominates global contract value, according to IDC.

[00:00:13] McKinsey reveals limited non-IT benefits from cloud migration, and the SBA unveils investing

[00:00:20] in America's small business hub to boost federal funding access.

[00:00:26] This is the Business of Tech.

[00:00:31] Today's episode is supported by CoreView.

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[00:01:13] Want to know more?

[00:01:14] Visit coreview.com slash MSP and find out more.

[00:01:19] Let's kick off the week with a look at the state of play.

[00:01:25] Gartner predicts that global IT spending will reach $5.06 trillion in 2024 with an 8% growth

[00:01:33] rate.

[00:01:34] The increase is primarily due to the repricing of communication services, while investment

[00:01:39] in generative AI also impacts the spending.

[00:01:42] Spending on data center systems is expected to grow by 10% this year, driven by generative

[00:01:48] AI initiatives.

[00:01:50] IT services are projected to be the largest market, with a 9.7% growth rate, while devices

[00:01:56] are expected to have the slowest growth at 3.6%.

[00:02:01] According to IDC, there's been a steady increase in enterprise technology spending leading

[00:02:05] to a rise in managed services deals.

[00:02:08] Although the total number of deals declined compared to the previous year, the average

[00:02:13] deal size remained the same.

[00:02:15] The US accounted for more than 45% of the global contract value, followed by Western Europe.

[00:02:21] AI-related deals saw a significant increase, primarily in manufacturing and financial services.

[00:02:28] IDC expects a higher number of large managed services contracts in 2024, focusing on AI

[00:02:34] and cloud technologies.

[00:02:37] According to a Gartner survey, 63% of organizations worldwide have implemented a zero trust

[00:02:43] strategy, with 78% investing less than 25% of their cybersecurity budget.

[00:02:48] The survey also found that many organizations lack clarity on best practices for zero trust

[00:02:53] implementations.

[00:02:55] And also according to IDC, global smartphone shipments increased by 7.8% in the first

[00:03:01] quarter of 2024, with Samsung reclaiming the top position from Apple.

[00:03:07] The report also highlights the growth of a Zanomi and Tranchen, and the shift

[00:03:11] in power among the top players in the market.

[00:03:15] And according to the latest State of the Industry report from the Information Services Group,

[00:03:19] or ISG, Europe's demand for IT and business services in Q1 of 2024 rose for the first

[00:03:26] time in a year, driven by growth from the banking, financial services and insurance

[00:03:30] sectors.

[00:03:31] The EMEA-ISG index shows a 2.5% increase in annual contract value for the combined

[00:03:38] market of managed services and cloud-based ASUS service, reaching $7.5 billion.

[00:03:45] Managed services ACV rose 3%, while business process outsourcing soared 40%.

[00:03:51] The ASUS service segment also grew with a 2% increase in ACV.

[00:03:57] The Russell 2000, that proxy for small businesses, has a 5-day return of negative 2.4% and

[00:04:03] a year-to-date of negative 3.55%.

[00:04:07] The S&P 600, which looks at the smallest companies, has a year-to-date of negative 4.41%, showing

[00:04:13] even for the past five days.

[00:04:17] Why do we care?

[00:04:19] Moderate growth seems to be the trend on the technology services front.

[00:04:23] The substantial growth in business process outsourcing and steady increases in managed

[00:04:27] services and ASUS service platforms reflects an ongoing shift toward outsourcing and

[00:04:32] cloud-based solutions driven by the need for efficiency and scalability in business ops.

[00:04:38] They're also all key areas to focus on to maximize success.

[00:04:45] According to a recent McKinsey survey, the benefits of cloud migration are not as universally

[00:04:50] beneficial as believed, with only one-third of European companies actively monitoring non-IT

[00:04:56] outcomes.

[00:04:58] Cloud computing technology is often associated with business agility and new revenue generation,

[00:05:03] but just 37% report cost savings outside IT.

[00:05:07] Only 32% report new revenue generation despite investing hundreds of millions of dollars in

[00:05:13] cloud computing.

[00:05:15] IT leaders in the UK and Ireland are increasingly hiring chief information security officers,

[00:05:21] but a new report from Fastly suggests that they don't fully understand the role.

[00:05:26] While 35% believe SISOs are crucial for cybersecurity, 27% see them as scapegoats and 23% think they

[00:05:33] have too much responsibility.

[00:05:35] Additionally, 24% believe SISOs are overworked and underpaid, and 18% believe the role offers

[00:05:41] poor value for money.

[00:05:44] Why do we care?

[00:05:46] Here's where the differences lies for those with top execution and those without.

[00:05:51] While cloud computing is often touted for its potential to enhance business agility

[00:05:54] and drive new revenue, the reality is more complex.

[00:05:58] First, the integration and optimization of cloud technologies requires not just IT adjustments,

[00:06:04] but also a transformation of business processes and models which if not managed effectively

[00:06:09] can lead to underwhelming results.

[00:06:11] Additionally, the lack of comprehensive outcome monitoring suggests that businesses

[00:06:16] might not be fully equipped to measure and therefore realize the full potential benefits

[00:06:21] of their cloud investments.

[00:06:23] All of this is why you care.

[00:06:25] Focusing here brings results.

[00:06:30] The U.S. Small Business Administration has launched the Investing in America Small Business

[00:06:35] Hub, a digital resource to help small businesses access federal funding opportunities and

[00:06:41] support.

[00:06:42] The platform provides guides, resource links, and information on grants, contracts, and

[00:06:46] market opportunities.

[00:06:47] The SBA also plans to hold local events and webinars to assist small business owners

[00:06:52] in securing contracts and taking advantage of incentives.

[00:06:56] In particular, opportunities are listed in home repair and construction, government

[00:07:00] contracting and subcontracting, and manufacturing.

[00:07:04] Why do we care?

[00:07:05] It's very tactical but a resource I wanted to highlight.

[00:07:09] There are specific options for high-speed internet contracting and for some customers

[00:07:13] these will be resources to leverage.

[00:07:18] With as many breaches and security concerns as I report in this show, it should be

[00:07:21] obvious that cybersecurity is not just about technology but also the human expertise needed

[00:07:27] to interpret and respond to complex threats.

[00:07:31] Huntress is focused on elevating SMBs and MSPs around the world.

[00:07:36] Huntress has a suite of fully managed cybersecurity solutions powered by a 24x7 human-led

[00:07:42] SOC dedicated to continuous monitoring, expert investigation, and rapid response.

[00:07:48] And the proof is the execution.

[00:07:51] Huntress is the number one rated EDR for SMBs on G2.

[00:07:57] Want to know more about the platform?

[00:07:59] Visit huntress.com slash MSP radio to learn more.

[00:08:06] Thanks for listening.

[00:08:07] Today is National IT Service Provider Day so for you, our audience, this is distinctly

[00:08:13] your day.

[00:08:14] On this past weekend I judged in the Tribe Hacks event at the College of William and

[00:08:19] Mary and I have to say, if you're worried about the future, there's some sharp talent

[00:08:23] coming up through the system now.

[00:08:25] Have a question you want answered?

[00:08:26] We're taking listener questions.

[00:08:28] Send them ideally as a voice memoir video to question at MSPradio.com.

[00:08:33] I answer those listener questions live each week on the Wednesday Live show on YouTube

[00:08:37] and LinkedIn 3 p.m. this week.

[00:08:39] And if you got a comment or a thought, put it in the comments if you're on

[00:08:42] YouTube or reach out to me on LinkedIn if you're listening to the podcast.

[00:08:46] Talk to you again tomorrow.

[00:08:49] The business of tech is written and produced by me, Dave Sobel under ethics

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[00:09:26] Once again, thanks for listening to me.

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