In this weeks roundup, the job market shrinks amid the COVID-19 crisis, cloud spending spikes in the lockdown economy, and more.
Here Are This Weeks Top Stories:
Cloud: COVID-19 Silver Lining: Cloud Spending to Rise in 2020
IT Strategy: COVID-19 Crisis Wipes Out Silicon Valley Jobs
Innovation: Supply Chain Hasnt Warmed Up to AI
Cloud
COVID-19 Silver Lining: Cloud Spending to Rise in 2020
Amidst a steep decline in enterprise IT spending in the U.S., cloud spending is expected to register a healthy growth in 2020 with spending on servers accounting for 47% of the total data center capex in the calendar year.
Big Picture: Worldwide spending on data center hardware and software grew by only 2% YoY in 2019, with spending on traditional data center and private cloud declining by 1% and spending on public cloud data center hardware and software growing by 7%. This was due to the top cloud service providers hitting the brakes on spending after a promising start. Even though the arrival of coronavirus has impacted almost all verticals, spending on data center servers will register a healthy uptick, according to research by Dell’Oro Group.
Our Take: The rise of remote work is expected to boost demand for digital services. To cater to this demand, cloud service providers will open up their wallets to buy more servers while remaining focused on the enterprise IT front. With more companies embracing remote work, cloud-based collaboration tools have become viable alternatives to maintain productivity. In this backdrop, cloud spending may continue to demonstrate an upward curve for the rest of the year.
IT Strategy
COVID-19 Crisis Wipes Out Silicon Valley Jobs
COVID-19 has shredded the U.S. economy. According to Morgan Stanley, up to 3.4 million people have filed for unemployment benefits in the third week of March, compared to an average of 225,000 a week during the past six months and 665,000 during the 2008 economic crisis. Over a million new unemployment claims have come from California.
Big Picture: California Governor Gavin Newsom told reporters this week that since March 13, the state clocked over a million unemployment claims with the daily average exceeding 106,000. The figure indicated that Silicon Valley tech giants and their supply chain firms have been firing employees by the thousands, unable to cope with rising expenses and diminished revenue. Many states have already admitted that they dont have enough money to fulfill all claims and are waiting for the $2 trillion federal stimulus package to ease the strain.
Our Take: According to reports, Cisco and Hitachi have already fired hundreds of workers and many other tech companies are doing the same to stabilize their finances. The $2 trillion federal stimulus will help fired workers receive unemployment benefits for a few months but whether jobs will come back to Silicon Valley depends on how long it will take for the country to eradicate the COVID-19 infection. California was among the first states to shut down factories and offices in the wake of the virus reaching U.S. shores.
Innovation
Supply Chain Hasnt Warmed Up to AI
An overwhelming percentage of supply chain professionals in manufacturing, transportation and other industries revealed their organizations are not leveraging artificial intelligence and predictive analytics for day-to-day operations but a majority of them are planning to utilize the two technologies in the near future.
Big Picture: Globally, the COVID-19 outbreak has upended the supply chain sector. Amid the grim news, the latest annual MHI Industry Report found only a small percentage of organizations are tapping AI and predictive analytics for operations and logistics. The survey findings revealed 12% of supply chain professionals are using AI, while 28% of them are using predictive analytics. However, the numbers could change in the future as 60% of professionals intend to adopt AI tools and 82% intend to use predictive analytics over the next five years.
According to supply chain professionals, the major factors holding back the adoption of AI and predictive analytics are poor data stream management, difficulty in hiring the right talent, and high competition for available talent as there are very few qualified professionals who are suitable for such jobs.
Our Take: Supply chain organizations are already suffering under the weight of the coronavirus crisis. They can come out of this strong by stepping up the plate and adopting emerging technologies, including AI to make smarter decisions and anticipate problems to successfully run their global logistics networks. AI can help these firms gain more visibility into their networks, maximize efficiency, and cut costs. However, the lack of qualified talent is real and this can be solved through a joint action by the industry, the government, and academia.
Trivia
To promote the development of new software to tackle various challenges associated with the coronavirus pandemic, the World Health Organizations has partnered with several tech companies, such as Facebook, Microsoft, Twitter, WeChat, Pinterest, Slack, and Giphy, to conduct a hackathon for software developers.
Developers willing to take part in the Hackathon will be able to use resources shared by the technology companies throughout their submission period and will be asked to build projects around themes like business, community, entertainment, education, and vulnerable populations.
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