Key Factors Impacting Life Sciences Tech Strategies and Budgets for 2023 — Risk and Implications

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Abstract

This IDC Survey Spotlight examines key factors impacting life sciences' tech strategies and budgets for 2023. The life science industry has undergone disruptive digital transformation over the past two years, enabling it to sustain and overcome the challenges posed by the COVID-19 pandemic. Technology partners have played a critical role in facilitating this. While two-thirds of the life science industry forecasts a moderate impact of the recession in 2023 lasting for more than a year, its top-most concern is regarding geopolitical turmoil driving changes in its tech providers. In addition:

• Two-thirds of the life science industry and half of the healthcare industry agreed that they wanted to reduce the "run" part of the IT budget to fund new "build" initiatives/projects in 2023.
• 40% of the healthcare industry and a third of the life science industry have changed their IT budget planning cycle to monthly to make adjustments throughout 2023. This is reflective of the need to carefully monitor the evolving landscape and to respond with speed and agility.
• While 45% of the life science industry and 50% of the healthcare industry saw no change in overall IT spending in 2023 as compared with 2022, about 42% of both healthcare and life sciences saw a reduction in specific IT budget items in 2023.
• The business process automation platform provider moved up from the third position in 2022 to the second position in 2023 as the most strategic technology partner for the life science industry, after the primary cloud provider. This is reflective of the need to drive efficiencies and address labor shortages through business automation.
• The primary consulting partner followed as a close third. This speaks to the critical importance of consulting partners, especially in this time of flux. Hence 27% of the industry saw a 5-10% increase in spend in 2023 as compared with 2022 on business consulting services. 20% saw more than a 10% increase in spend on IT consulting services.
• As the life science industry is moving rapidly toward the adoption of hybrid, multicloud strategies, 24% of the life science industry plans to increase its spend on hybrid/cross-cloud services by more than 10% in 2023 as compared with 2022.
• With the increasing focus on deriving intelligent insights from data by leveraging artificial intelligence/machine learning (AI/ML), one sees a 32% increase in spend on AI/ML in 2023 by the life science industry.
• Approximately 10% of the life science industry plans on a more than 10% reduction in general-purpose compute instances and special-purpose compute platforms; general-purpose storage systems, enterprise network equipment, PaaS data services, and application platforms; and devices in 2023.
• Application modernization and cloud migration services remain a priority with 64% increasing spend on the same by up to 10% in 2023.

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