The Global Economy Is Bewildering Now: Should Tech Professionals Worry?
We offer some insights to help you navigate these confounding times.
By T.C. Doyle
How does it feel to be working in the fastest-growing economy since 1984?
If your answer is “uneasy,” you’re not alone. Millions of workers are confounded by mixed signals everywhere. Here are some thoughts from Channelnomics to help guide you.
1. The Stock Market Isn’t the Economy
This month (January), the Commerce Department reported that the U.S. economy grew 5.7% in 2021. Despite the strong economic growth, markets fell afterwards.
There’s no shortage of reasons why. Inflation, for example, recently hit a 40-year high, which will likely force the Federal Reserve to raise interest rates. COVID-19, meanwhile, continues to disrupt everyday life despite signs that Omicron may have peaked. Then there’s Russia, which is poised to undermine, if not attack, Ukraine any day — a move that would surely send global markets reeling.
Investors have been on edge all month. On Monday, Jan. 24, the Dow Jones Industrial Average fell by more than 1,000 points before turning positive by the closing bell. Two days later, Microsoft reported results for the December quarter that many said were the best ever posted by the company. Despite the good news, Microsoft shares fell 5% in after-hours trading only to recover 2% later. Apple, too, saw shares fall in after-hours trading after it reported record sales for the December quarter.
While the upheaval on Wall Street makes headlines, it bears repeating that the stock market isn’t the economy; they’re simply not one and the same.
If you want better guidance on what to expect in 2022, look to other data.
2. Long-Term Indicators Look Good, Though Challenges Loom
Given the unpredictability of global markets, many have asked us if tech professionals should abandon freshly minted plans and start preparing for a downturn. The short answer is “no,” but this doesn’t mean you can relax. This is especially true if you’re struggling with supply-chain delays, which have resulted in product backlogs that have ballooned to as many as 500 days.
If you sell hardware, you can’t expect customers to wait more than a year for product delivery. This is especially true where new options exist. Customers with aging data centers will certainly accelerate plans to move digital assets to the cloud if delays persist.
Looking beyond delays, forecasters anticipate steady growth in 2022. The Conference Board’s December 2021 Measure of CEO Confidence found that CEOs remain optimistic entering 2022 despite a drop in confidence in Q4. This aligns with the global information and communication technology (ICT) forecast released in mid-January by Gartner. In its report, Gartner said spending on ICT goods and services will reach $4.5 trillion in 2022, an increase of 5.1% over 2021.
We at Channelnomics see reason for guarded optimism. Our annual Channelnomics Channel Forecast, which is scheduled for release in February, reports that 65% of partners enjoyed meaningful growth of 5% or greater in 2021. While the figure is down slightly from 2020, it’s solid growth nonetheless. What’s more, it was achieved at a time when many customers experienced business disruption or bankruptcy due to the global pandemic.
3. Digital Transformation Continues to Fuel Investments
At various times, tech spending is fueled by a “must have” innovation such as the original iPhone or a pressing issue such as the Y2K bug. This isn’t the case today. Instead, tech spending continues to be fueled by the realization that existing innovation isn’t ideally suited to the realities of the 2022 workplace.
To make the most of the opportunities at hand, and to mitigate the challenges pressing down upon them, organizations are transforming manual processes, equipping remote workforces, and investing in omnichannel capabilities so they may engage customers anywhere, anytime. Given that a lot of recent tech spending was done in response to the pandemic — in a rush, in other words — organizations everywhere find themselves with one of everything. They now face the daunting task of standardizing, securing, and otherwise bringing into compliance their investments. This will mean good business for thousands of channel partners and the vendors that support them.
If you’re wondering how organizations will fund these efforts, just remember that millions can still borrow at historically low interest rates and/or tap some of the record cash reserves they have in the bank.
What we expect to emerge in 2022 is a spending shift to strategic priorities that emphasize operational agility, superior customer experiences, and predictive analytics. Organizations will increasingly look to put data to use to develop new capabilities, anticipate changing customer needs, and reduce operational costs.
4. Emerging Technologies Will Have Their Moment, Just Not Yet
In the months ahead, you’ll hear plenty about the metaverse, 5G, edge computing, and more. In time, one or more will drive new business. But for now, spending on infrastructure and business applications will power the business tech economy. Companies continue to need faster and more durable networks, new software subscriptions to drive marketing and e-commerce initiatives, and more endpoint devices to empower workers who may never return to the office full-time.
While uneasiness abounds, there’s no reason to panic or tear up 2022 growth plans. This could change, of course, the moment Russian tanks roll across the Ukraine border or the instant someone launches the first full-scale cyberwar.
For more on this topic, be sure check out Larry Walsh’s latest analyst note, “Economic Challenges Will Persist Through 2023 Despite Strong Indicators,” available exclusively to our Brainstorm subscribers. If you’re not familiar with Channelnomics Brainstorm or if you’re interested in becoming a subscriber, visit www.channelnomics.com/brainstorm for more information.
T.C. Doyle is the vice president of strategic content at Channelnomics. A renowned content creator, Doyle has spent the better part of the past four decades covering and commenting on the channel in different capacities. Follow him on Twitter at @tcdutah.