TECH SUPPLIER Apr 2022 - IDC Survey - Doc # EUR148981522

Inflation Pressures in Europe: How Inflation Impacts IT Spending and Investment Strategies — Insights from IDC's European Future Enterprise Resiliency and Spending Survey

By:

Carla La Croce
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Abstract

The IDC Survey covers factors that can influence general technology investments and digital transformation (DX) plans with a focus on disruptions in technology supply chains and general inflation. Since 4Q21, there has been a global pressure on prices. After the COVID-19 pandemic forced factories to shut down and triggered clogging along shipping routes, demand started to rise again, pushing for the rebound of global activities, and in turn, prices. Since demand was higher than supply, inflation pressure was partially due to shortages of goods. Moreover, energy prices contributed to this fast increase in prices. IT leaders anticipate that general inflation and IT supply chain issues will alter cost assumptions and are re-evaluating spending plans for 2022 in the aftermath of the uncertain geopolitical environment.

This IDC Survey provides insights based on results from wave 1 of IDC's European Future Enterprise Resiliency and Spending Survey of 193 IT and business leaders in EMEA conducted in February 2022. Lower availability of input materials is real for silicon and other components, and hardware spending is expected to decrease. Impact on product prices is more pronounced in devices, while impact on infrastructure prices is much more muted. There will be an accelerated shift to as-a-service consumption, especially public cloud services.

"Europe has a high dependency from commodity materials, essential for the IT industry, imported from Russia," said Carla La Croce, senior research analyst, Data and Analytics at IDC. "This dependency highlights the fragility of the European supply chain. Lower availability for certain input materials makes them more costly, exacerbating an already supply chain disruption–led inflation pressure."


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