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CIOs Reprioritize Tech Spending in Era of Nonstop Lockdowns and Reopenings – The Wall Street Journal


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CIOs Reprioritize Tech Spending in Era of Nonstop Lockdowns and Reopenings – The Wall Street Journal

Many companies are rethinking technology spending plans amid tighter budgets, as they look for ways to serve customers in the age of social distancing.Vast Bank, a Tulsa, Okla.-based lender with a dozen branches across the state, has put a number of back-office IT projects on hold in order to redirect spending into digital-signature and document…

Many companies are rethinking technology spending plans amid tighter budgets, as they look for ways to serve customers in the age of social distancing.

Vast Bank, a Tulsa, Okla.-based lender with a dozen branches across the state, has put a number of back-office IT projects on hold in order to redirect spending into digital-signature and document capabilities, said Stephen Talyor, the bank’s chief information officer.

The move allows personal and commercial borrowers to complete the entire loan-application process without entering a bank, something they could not do before the pandemic, he said.

Last year, the bank launched an ambitious project to install an SAP-developed banking platform as the core of its expanding digital services, including the use of advanced artificial-intelligence tools.

“We were in the middle of that when the pandemic struck,” Mr. Taylor said, “and we had to reprioritize.”

New coronavirus cases in Oklahoma have risen 26% over the past week. The state has so far recorded 4,675 cases, including its governor, and 428 deaths.

Among the bank’s new initiatives was to enable remote working for its staff—in part with collaboration tools like Microsoft Teams—while building new apps to serve customers with far fewer employees at the bank, he said. That meant shelving IT plans set out earlier in the year, he added, such as upgrading helpdesk software or developing self-service password resets.

Worldwide information-technology spending this year is expected to decline by 7.3% to $3.5 trillion, according to IT market research firm

Gartner Inc.

Tighter budgets will have many CIOs shopping for more cloud services and subscription software to lower upfront costs, Gartner says.

“But the improvements in IT spending, as CIOs strive to become more digital than planned, come at the expense of many other spending lines,” said John-David Lovelock, Gartner’s vice president of research.

Mr. Lovelock said Covid-19 is forcing banks, department stores, movie theaters and other businesses to find new ways of using IT to stay afloat without physical locations.

Large enterprise IT providers, including

Microsoft Corp.,

International Business Machines Corp.

and SAP SE, say corporate customers are postponing major technology projects as they race to install collaboration and business-continuity software to support remote employees.

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The surge of coronavirus cases in dozens of states in recent weeks is prompting some public officials to institute stricter containment measures, including lockdowns and business closures.

More than 136,466 people have died of the disease across the nation, according to data compiled by Johns Hopkins University, and more than 3.43 million have been infected.

As some regions lift lockdowns, pent-up demand pushed consumer spending up by a record percentage increase. Household spending in May rose by 8.2%, more than double an all-time high dating from 1959, the government reported in June. The May gains were recorded ahead of a resurgence of the virus in recent weeks, which is likely to stall a full recovery, economists say.   

Even before restrictions were eased in certain areas, some companies began redirecting IT spending to fast-track planned customer-service projects with an eye to capturing unexpected demand.

Home improvement company

Lowe’s Cos

. Inc. was in the middle of migrating its IT infrastructure to Google Cloud in early spring, just as customers began doubling down on home improvement projects, and buying critical equipment for their homes and home offices, said CIO Seemantini Godbole.

“There was just a tremendous demand,” she said. “We could see it in our volumes and transactions.”

Ms. Godbole decided to accelerate the company’s migration to the cloud, anticipating that IT infrastructure and technology services were going to become even more critical during the crisis. The company, which has been using Google Cloud services for about two years, completed its migration sometime in late June, roughly a month ahead of schedule.

Lowe’s also pushed forward the development of a curbside pickup app that would enable customers to pick up their orders in front of the store. The project had been planned for later this year at the earliest, Ms. Godbole said, but instead, the app was rolled out in April.

—Sara Castellanos contributed to this article.

Write to Angus Loten at [email protected]

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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