With 67% of CFOs planning to defer or cancel planned investments, cost-cutting attention is centered around facilities/general capital expenditures and the workforce, according to a PwC survey of 313 U.S. finance leaders released Monday. The survey was conducted last week.
CFOs are also looking toward technology as another cost-cutting area; 53% of the respondents with plans to defer or cancel investments are considering IT and another 25% are considering digital transformation. Only 2% of those financial executives are considering reductions or deferrals of cybersecurity or privacy investments, according to the survey.
Estimates of a quick return to normal are dissipating. During the week of March 9, 66% of respondents from the U.S. and Mexico said their companies could recover within a month. Now, 39% of executives say a return to business as usual "if COVID-19 were to end today" will take one one to three months, according to the survey. Another 22% say it will take three to six months.
More than a month into the shutdown, the conversation around recovery and cost-containment has shifted from initial triage to the future. Now, 26% of CFOs are anticipating layoffs, up from 16% two weeks ago.
The business impacts of the health crisis are coming into focus, as companies shift from short-term reaction to medium- or long-term business planning, driven by the drumbeat of a recession.
"There is little doubt that the U.S. economy has downshifted into recession," PwC said. The Conference Board expected the U.S. economy to contract between 3.6% and 7.4%.
But what does all this mean for IT? Technology budgets will not appear as robust as at the start of 2020 as organizations clip unnecessary spending.
The focus is cost savings in the short- and long-term, said Dennis Hodges, CIO of Inteva Products, speaking during an Enterprise Technology Research webinar last week. Certain mission-critical projects are continuing and the attention on digital transformation could help reduce operation costs.
The crisis could even serve as an "accelerant" for cloud migration plans, according to Craig Lowery, research VP at Gartner.
Firms that have started a "digital journey," whether that's investments in robotic process automation or cloud-based technology, are continuing, according to Bhushan Sethi, global people & organization co-leader, speaking on a conference call Monday. The focus remains on productivity and tying investments back to a business case, but "new spend is harder to get approval for."
The main focus of cost cutting is facilities and CapEx investments, according to Amity Millhiser, chief clients officer at PwC. Technology spend continues to be very important particularly as companies understand the "digitally enabled workforce."