>> Commentator: From theCUBEstudios in Palo Alto in Boston, connecting with thoughtleaders throughout the world, this is a CUBE Conversation. >> Hello everybody, welcome to this special CUBE Conversation. You know, as the COVID-1 9pandemic grips the world countries, my best friend at EnterpriseTechnology Research have been hard-boiled at work toreally try to understand and quantify the impact on IT expending, and with me is Sagar Kadakia, who is the director of research at ETR. Sagar, huge to see youagain, thanks for coming on. >> Great to see you too, Dave, yeah, great to see you, Dave, thank you so much for having me on. >> So you guys justdropped your first look at the latest survey, and you exclusively used to go and asked about the impactof coronavirus on spend. Can you share with our audience your working thesis? >> Yeah , no problem. And time to give some context, there was so much internal interest, so much interest from buyers , not to really understandhow many organizations were being affected, but what are going to be the budget impacts on 2020, when you think about IT, and so that’s really how westructured the instruct down, that, and certainly getting to the bottom of why are these plans changing.And so our thesis rightnow and what we’re visualize based on the data is thatbudgets have come down to about 0% or flat, for 2020. I mull coming into the year, Incentis was right around 4 %, so you’ve seen a retraction from that, and if the environmentcontinues to go south, if we continue to see actions taken at the federal and nation statu, where more beings aregoing to be quarantined, running from home, Ithink technology spend will unavoidably continue to come down. But there is some positivesthat we are seeing, but right now we’re right around 0 %. >> And we should explain, so this is, currently a bit over 1000 respondents, and you’ll continue to collect data for the next several days, or even weeks, correct? >> That’s right, exactly, so we launched a investigation on Wednesday, and right nowwe’ve got about 1100 CIOs, IT executives, it’s areally world-wide test, the goal was, across different errand names, across different regions, across different verticals, ones that are beingimpacted enormously, ones that are being impacted less.Let’s try to gaugeoverall what’s going on, with IT plans, and why people are drawing the decisions they are uttering right now. And so that was reallythe focus of the study results. >> Okay, so there’s obviouslysome negatives in the data, and there’s a high degree of uncertainty, but there are somebright recognizes that we realise, especially the transformation to work from dwelling, and I want to ask you about a map that you guys put out. It presented a significant portion of the results of the investigation, about 40% of the respondents, indicated really no impact to spending, and the other, 20% are actuallyaccelerating their spend, as a result of COVID-1 9, canyou included some emblazon to that? >> Yeah, I visualize the positive waste, or the no change in spend, I think that is what a lot of the market right now is missing, and I haven’t seen alot of research on that,’ cause no one was hasreally been able to quantify how budgets are changing, and so, as you observed, we’re actually hearing parties accelerate deplete because of COVID-1 9, and the reason is, they’re trying to avoid a catastrophe in productivity.They are ramping up all thiswork from home infrastructure , not just collaboration tools, virtualization infrastructure, increasing VPN networking bandwidth, mobile machines, laptops, protection, desktop aid, right? You’re a Fortune 500 band, and you have 40, 50, 60,000 employees toiling from dwelling all of a sudden, you have to be able tosupport those works, and as a result, you’re actually participating a large number of organizationsaccelerating invest, and even the ones that are being hurt by the broken supply orders, the demand coming down, they’re experience some oftheir devote acceleration being offset by spending a little bit more on what we’re entitle thiswork from home infrastructure. >> Yeah, so in the chart you put under, there’s a lot of red, but there’salso quite a bit of green, and then a big midpoint of no change.The midpoint average is a negative 3.8%, can you explain what that represents, how we should perform that? >> Yeah, I believe the easiestway I think about it is, consensus expectationscoming into the year were that there was goingto be a growth of approximately 4% in global IT spend. What we’re participating at themidpoint average right now is approximately a 4% pullback, and so that’s how we’re getting back to effectively flat, or 0% raise, and I thinka lot of organizations, a great deal of clients thatwe’ve been talking to, their expectations were, itwas going to be a lot worse, merely if you’re followingwhat’s going on in the news, world markets and nonsense likethat, and rightfully so. But I belief a lot ofpeople are missing the fact that there is some of thisoffset that is occurring from people who are notchanging their waste, because even though on one side they are reducing IT funds, and they’re having to accelerate their work from home infrastructure, and of course, the bucketof organizations where, “Look, I’m not being as impacted “by the broken supplychains or the needs and requirements, “but because I have so manyemployees manipulating from residence, “I need to be able to allowthem to be productive.” >> Sagar, you are familiar with, we’ve been working with ETR now for the betterpart of six or seven months, and what I look for in the data is I try to identifysome of the macro directions that I see when we talk to theCUBE patrons, and try to see if your data confirms that, and the other data point you put out was anticipated IT budget growth rate, and the following chart to me was amazing, because it started in early to mid March, early March 12 th, sortof the starting point, and then you can see thesentiment that precisely lessens, to almost exactly the way in which, really daily, you ascertained coronavirus report just really influence the markets, and so, are you able precisely explainwhat you’re seeing here in terms of the growthrate of that IT devote, in terms of how people were responding, over the course of March? >> Yeah, one of thethings we knew going into, before we propelled this instruct down was, this is going to be avery dynamic environment.Even before we launchedthe study last-place Wednesday, every single day another shoe is dropping in terms of governmentactions being taken, what beings were doing, and sowe realise the decision up front that when we launch this drill down, we need to be able totrack the daily influence over the next three to four weeks, because we don’t frankly knowhow it’s going to change, and so in that chart, what you’re seeing is, when we launched thesurvey just last Wednesday, you did experience a little of a retraction, I make maybe five or 600 CIOs had made precisely in the first day or so, you realized about a 2% retractionin annual plan proliferation, and really over a few days, by last-place Thursday, Friday, where they really, everyonewas working from dwelling, they framed a lot of differentmandates in place, again, at the state and federal level.You can see that wasdropping almost daily, and so I fantasize our thesis again is, right now we’re at 0 %, and again, some of that, the reason we’re not more negative is because there is some offset come from the flagrant workfrom home infrastructure, but ultimately if theenvironment to continue its efforts to sour, we expect growth ratesto continue coming down, and eventually to be a declinein spend versus last year. >> And you determined the point thatis somewhat counterintuitive, but like you said before, I’ve not interpret any other research on this, certainly not as fresh as the ETR data, the other thing that I reallylike about your data set is that you can drill into the industries and try to identify what’sgoing on within sectors, within manufactures, certainly you can drill down with the specific vendorswithin those industries, but what are you seeingin terms of manufactures that are being affected, undoubtedly those that are exposed to the supply chain are suggestible, but can you share with our audience what your knows are there? >> Yeah, industrials, fabrics, manufacturing, retail, consumer, healthcare, pharma, those are the verticals froma supply series attitude that are indicating elevated levels of broken supply bonds, andwhat’s actually interesting is we, in this survey we actually invited , not only whether your supplychains were ended today, but do you anticipatecontinuing suffering busted supply bonds inthree months from now, and those percentages was an increase, and I think that really tells us that this is not a one ortwo month type of recovery, we’re going to see render bonds and require continuing to be broken, continuing to come down overthe next three, four months, that, I see, is probablyone of the biggest takeaways from the drill down study .>> Now, one of the points that affect me, and if you think aboutthe post-9/ 11 nature, we’ve seen permanentchanges as one of the outcomes of 9/11, and countless beings are thinking that COVID-1 9 will likewise stimulate some permanent mutates. Perhaps people find that work from dwelling actually drives some added benefit, and it really reframes their theory. Do you have any judgments on that? >> I judge based on the datathat we’re regard still further, a good deal of CIOs did indicate, I think it was rightaround 70% of the 1000 CIOs that made the survey, did indicate that the budget alters that they revealed were going to be temporary, and I think that’s actuallya pretty positive takeaway. Again, I believe everythingis very dynamic right now. Bands are scaling their work from home infrastructure, that is priority number one, that’s taking away from other IT projects, we are therefore do expect emergingand next-generation dealers to get affected, we’re moving towards a keep the illuminates on strategy right now.And so when we look at it, I think, the changes that arebeing made are temporary, but if things continue to worsen, I think you may seeorganizations start going into those contingency plans and establishing some of these budget reductions permanent, so yes, there are some parallels to 9/11, but this one, we don’t quite know how things are going to end up, because every week, wefind something different out in the news, we don’treally know how this virus is going to impact us moving forward, and there’s a lot of lack of testing and things of that sort, so I think in the next few weeks, we should get a betteridea of whether or not these fund reductions aregoing to become permanent, more so than we’re encounter right now .>> Yeah, I think you’re right, I convey there is, thewatch oath is misgiving, which does it all thatmuch more important that you prevent a pulsing on world markets, and thank goodness youguys are doing that. I’m interested in, if you have any data on the focus on productivity, how organizations are findingtheir ability to adapt, and really of course they wantto drive that productivity, but are they able to scale it? >> I think that’s oneof the other large-scale issues that the media hasn’t addressed more. Imagine again, you’re a Fortune 100, Fortune 500 party, you’re not used to having 50, 60, 100,000 hires cultivating from dwelling. Forget the infrastructure factor, exactly increased productivity, the collaboration, a lot of the commentarythat we got from CIOs was, “We’re not ready to scale anentire workforce from home.” You’re watch a great deal of IT business that rely on very largeconferences to generate revenue, that rely on client meetingsto generate revenue.You’re ascertaining a good deal of businesstrips getting canceled, I think something around7 0 or 80% of organizations, out of 1000 indicated that they are canceling business expeditions, so the productivity is coming down, because organizationsare just not capable, many of them, of scale a creation from home type of infrastructure. And so, you are going tosee productivity come down, and I think that probablyhas the most relevant impact when you think about GDP growth, right? Establishments are comingforward and saying “We’re not going to be ableto produce or service as much, “and we’re not goingto be able to prospect, “or maintain client affairs so much better, “because of travel.” And so I reckon those are goingto be some of the bigger significances that we end up seeing.Some business can work from home, and gaze, if you’re in manufacturing, or you have works that work on a rig, there’s no work from home option for that, and so, I think in the next few months we are going to start identifying some of the wanes on those ends. >> You are outlined in your analysis that things would likely worsen overthe next three months, that’s not surprising. Monetary experts, we’reseeing a variety of situations, some are saying it’s aself-fulfilling recession, and others are actuallycalling for V-shaped recovery, but nobody certainly knows, and so simply to make sure we understand ETR’s thinking, you’re calling right now for0% IT plan expansion this year, refuses compensated by some of theinvestment in work from dwelling, that’s kind of the summaryon the outlook today, and we know that can change .>> That’s right, and I thinkit’s important to state the employment from home infrastructure, it is not a one for oneoffset on IT budget diminishes. That charge is definitely going down faster, which is why we led from 4% to what we’re forecasting now at 0 %. If things continue to worsen, which based on the data that we compiled, the next 3 month, we don’t see a recoveryin the next three months, because more organizations indicated, more separated furnish orders, less involve on the consumeror the business side, and so it’s tough to saywhat’s going to happen six to 12 months from now, but at the very least, we doknow for the next 3 month, things are going to continue worsening, and if we continue takingvery strict wars simply across the board, wewould expect that 0% list to go into a reject, and so that’s really what we’re looking fornow, is because this model is dynamic, since we are do continue, we do want to continue polling men for the coming four to six to eight weeks, as to how their budgets are changing, we should have a better idea ,’ reason I review right now, everyone’s watching, arewe going back to work in the next week or two, orare we working from home, and the longer “we ii” quarantined, the less fulfills, the lessthat we’re getting on flights, the more that’s going to add to engineering invest coming down, and eventually, as I mentioned earlier, administrations, they’re goingto go into contingency plans, those temporary modifications thatthey’re making right now, those are going tobecome permanent mutates, because now they’re going to have issues where they’re just notgenerating fairly income because of productivity, there’s a slump, layoffs, and then youkind of see everything spiral out of control .>> I meant to ask you, when youtalked about infrastructure, and we were talking about work from home, cybersecurity was another area that is showing some momentum, is that because peopleare trying to adjust their work from homeinfrastructure and secure that? >> That’s exactly it. You’re an organization, let’s say once again, same sample, Fortune 100, Fortune 500 society. The number of endpoints “youve had”, all these employees areaccessing data, emails, applications from home, mobiledevices, laptops, right? iPads, things that they mayhave not worked historically, and so yes, organizationsare more exposed, and I belief a great deal oforganizations was concerned at employees operating from dwelling, only from a protection view, so you are going to see, andwe’re already seeing this in the data as we’re lookingat some individual corporations and things of that mood, endpoints, access stations, those areas are critical, and you are going to see more spend in those areas , no question .>> So let’s share with ouraudience what they can expect in the coming weeks and months, so folks, just so you understand, so ETR has a dataset based on a body of about4 500 CIOs and IT customers, about 1000, more than1 000 every quarter answer, ETR, very consistent survey, so you can do time series analysis, and what happens is, ETRclients get access to the data, early access, and thenETR droops a webcast, every quarter, where it informs its patrons on the results. So where are we at in that process, you guys go into aself-imposed quiet period, and then you release to the markets, can you explain that a little bit, and what we can expect overthe next couple of weeks. >> Yeah, sure, so we launcheda survey last-place Wednesday, we’re already at about 1100 CIOs and IT executives. Now it’s interesting, we’re actually doingthis COVID drill down, as well as our technologyspending intention survey. That sketch captivates spendingintent on about 350 vendors across about 28 or 29 different engineering spheres, so defence, networking, storage.So, all that data is coming through, in the next few days we’reactually going to release what we call anticipates in the field. It’s kind of short-change narrations, make like a decision or two, on each vendor, how they’re trending, and what we’re doing uniquely this time is stating which vendorsare being impacted the most positively and negatively, by COVID-1 9, and so expectthat in the next few days, and then around, probablyaround April first or so, we will close the survey, again, we’re expecting like you said 13, 14, 1500 CIOs, IT executives globally, to take the survey.We’ll certainly go into thetrenches at that point, the entire team, we’ll spend a solid week going through all thedata, and then mid-April, before fellowships, or alarge number of corporations start reporting on the IT back, we will release a largeamount of research, we’ll have some final COVID takeaways, though that will continue being dynamic for the next three to six months, but at least we’ll tryto take a balance sheet type of look at it and say”Look, here’s where we are, “here’s where the impact is, whether we’re at a slump “or growth or whatever it is, ” so we’ll have a better envision in a few weeks on that as well, and then we’ll certainly be able to dive into the sectors and marketers that we think are bestpositioned for the rest of 2020. >> Yeah, we’re barelyscratching the surface here, as I said, this is a firstly inspected. So check out, it’s ETR.plusis where you can get updates on what’s going on now, and we’ll patently keepyou updated as well, Sagar, thanks so muchfor coming on theCUBE and sharing this veryimportant information .>> Yeah, thanks Dave, I reallyappreciate having me on. >> All privilege, stand safe myfriend, we’ll talk to you, and thank you for watching everybody. This is Dave Vellante for theCUBE, and we will see you next time.( tranquilize music ).
