ANZ software spending jumps to $13 billion amid tech boom

30 May 2021 Consultancy.com.au 3 min. read
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Software spending in Australia and New Zealand (ANZ) crossed the $13 billion mark through 2020, clocking a 7% jump from the year before – according to a new report from market intelligence and advisory firm International Data Corporation (IDC).

A minor blip: Covid-19 and the resultant economic crisis squeezed spending across business segments, and ANZ software spending slowed to 3% year-on-year growth in the first half of 2020. The latter half saw technology play a crucial role in business recovery – bringing the software spend back up to a healthy 12% growth rate compared to late 2019. 

“This is a strong indicator that ANZ organisations are going ahead with their digital transformation initiatives to address weak spots uncovered by the Covid-19 pandemic, building business resiliency and investing in the next normal,” noted IDC ANZ senior market analystAnastasia Antonova. 

ANZ Software Spend

Examples abound of how software is driving post-pandemic life and business. Enterprises seeking cost savings, speed and agility in response to rapid market changes turned to the cloud – bringing public cloud deployment up to 41% of total software revenues, compared to 35% in 2019. 

The shift to remote working and education – for the long run in some cases – drove a 32% rise in spending on collaborative technologies such as Zoom, Teams, Slack, and more in 2020. And looking to the future, advanced technology such as artificial intelligence, data analytics and robotics took on a new relevance among businesses – as they prepare for high resilience and cut-throat competitiveness. 

“Businesses are building towards the agile, adaptive operating model,” explained John Feng, fellow senior market analyst at IDC in ANZ. “Companies need data-driven, AI-enhanced decision-making, and reliable, integrated, cross-department data sources for a solid foundation to then build subsequent processes.” 

So advanced tech will shore up the back end against pandemic-induced turbulence. Another product of Covid-19 is a more discerning and demanding consumer than ever. Businesses have realised that a memorable customer experience will be worth its weight in gold in the new normal – spelling the difference between competitiveness and obscurity.

Small and medium businesses are also growing their technology investments

Per the IDC report, ANZ investments in customer relationship management applications – such as Salesforce – increased by 13% in the latter half of 2020. “Current, clean, constant, and compliant customer data paired with AI-enabled technology is key for future-looking organisations to transform customer relationships and enable customer loyalty and trust,” said Antonova. 

The SMB market

And its not just large corporates leading the software spending charge. A separate IDC survey from earlier this year revealed that more than half of small and medium businesses (SMBs) across ANZ plan to grow their technology spending by at least 10% this year – with some planning a boost of over 20%. Another quarter plan to keep spending at a constant, with a handful of others – just over 10% – easing up on their investments.  

According to IDC Asia Pacific partner Chris Morris, these numbers paint a picture of survival. “The impacts of the lockdowns and work-at-home directives have not only delayed projects or initiatives, but also exposed SMBs shortcomings in connectivity, support, security, and sourcing. Business resiliency of these SMBs was put to the test as their IT systems adapted to a new operating environment.”