from the cube studios in Palo Alto in Boston connecting with thought leaders all around the world this is a cube conversation [Music] hello everybody and welcome to this week wiki bond cube insights powered by ETR in this breaking analysis we want to update you on the latest spending data from EGR as you know we've been tracking this weekly saga kodachi is here he's the director of research at ET our saga thanks for coming on thanks for having me again Dave really appreciate it yes so so let me remind everybody so we entered the Year this year 2020 with a consensus IT spend for cast of plus 4% once coronavirus hit ET are launched its latest survey in March and we saw those numbers you'll come down last week we reported well the first report we made was it looked like it was flat last week we reported a slight negative and today we want to update you guys on those numbers so saga before we get into the data just give us the high level on where you guys are at in terms of your survey yeah no problem so currently we are forecasting a decline in global IT budgets about negative 4% I think what's happened you know over the last you know 10 or 15 days is you've just seen more and more information released that's given organizations more of an understanding of just how severe this you know epidemic is and so what we've been able to do on our end is kind of do an event study analysis or simulation analysis kind of what you're seeing here a really pinpoint the time period where organizations understood the severity of the epidemic and then really trying to measure the declines in IT budgets from there great so guys bring that slide back up I want to share with our audience what's happening here so what ETR has done is an event-based analysis and what you can see is where the survey launched on 3/11 you could see how sentiment has declined literally daily as the data rolled in then you see the US declared a national emergency you saw that the federal plan leaked for that you know penned pandemic protect projection and obviously New York became a hot spot and then you can see this the stimulus package in it and sagger it looks like there's a slight uptick here but generally speaking it's down now it could be worse but you guys were the first to report the offset from work it worked from home infrastructure we'll talk about that a little bit talk about this event analysis and what you're seeing here and how you compressed the analysis hosting these events no problem so let's start with a blue line here and just so the audience knows the x-axis is going to be date and the y-axis is going to be annual growth or decline in nit budgets what you're seeing here and if we start with the blue line is we started pulling on 3/11 and on that date we started to ask you know fortune 100 is fortune 500 how their budget was going to change based on the impacts of coded nineteen versus their original expectations coming into coming into the year and again consensus estimates coming to the year were positive four percent so if you track that line all the way through you get to a decline of about one percent now what's the issue of starting polling on 3/11 or using that blue line well one of the big issues is a few days later the US declared a national emergency so more information was released right I think organizations that took the survey in the first two days didn't have a complete picture as to what's going on and then effectively a week later you saw federal documents get leaked stating how bad this epidemic was right in terms of the last 18 18 plus months and so what we did was we did it effectively an event based analysis or defuse different simulation where if you take a look at the yellow and red lines to start what we're doing is we're effectively saying okay let's ignore everyone that took the survey prior to that let's take their budgets in terms of how they indicated change versus their original expectations for 2020 and then let's go ahead and map that and if you look at the yellow line as an example that goes to a decline of 2% and then once I think you know the next shoe dropped in terms of organizations understanding this is not going to be a few weeks or this is not the common cold or flu once organizations knew this was going to be an 18 plus epidemic you can see if we started pulling respondents from there how much more negative it gets and of course once NYC became the epicenter you saw a little another shoe drop so now those those scenarios or simulations are taking us between a decline of three and four percent and then of course if we look at that last purple line there when the stimulus got announced what we are seeing is it looks like it may have bottomed down we have to continue tracking it because you know again it's just a few days since the stimulus is was passed and so let's see if the data starts improve a little bit or at least stabilize but I think from the last three events in terms of the the federal plan being leaked NYC becoming the epicenter and the stimulus it looks like the market now is fully aware of what's going on and now we're kind of seeing some stabilization in the data in terms of the declines for 2020 so between the feds action and the the fiscal stimulus we've we've seen some optimism although people are really cautious of course remember folks this would be worse were it not for the shift in spend to work from home infrastructure not just collaboration and visualization tools but other infrastructure around that network bandwidth security desktop virtualization etc so guys if you bring up the next chart I want to set this up we've been reporting this framework for a while now what this shows is what the sentiment is in terms of the budget change and you can see the gray bar now is 35% it started at 40% so that's dropped so the percentage of CIO saying no change the green is held pretty steady at around 20 to 22% that's it's roughly in there and the red you know has been has been shifting and you can see most of the green ie spending more in 2020 is focused on that you know one to two ten percent but but Sagar bring us up to date now we're going to settle in it right now about three and a half to four percent on the negative side give us some color on this chart please yeah no problem so the best way to connect this chart with what we saw earlier is this is a snapshot so this is a single day so this is the data that is feeding the time series chart kind of help the audience understand what's going on so if we were to look at this exact chart Oh since March 11 you would see that midpoint Average effectively coming down every day and that's effectively what's making up that time series in terms of this chart you know Dave you kind of hit it right on the nail you're kind of seeing the positivity remain or be stable and again that's that work from home infrastructure as you as you mentioned right the collaboration pools no the virtualization support services networking bandwidth all that stuff right being more and more security but on the negative side I think what you're seeing is that again as organizations now understand the severity of the epidemic I think as we understand further and we've talked about this you know a few weeks ago that organizations were anticipating less demand they were anticipating an uptick in broken supply chains now you're starting to see some of that play out and as a result you're seeing organizations get more and more negative and that's why that midpoint average it keeps declining that's why those red bars keep going up is the the impacts in you know based on the data are are now starting to be to be seen and so you know let's see if the stimulus stabilizes this data and we'll continue tracking that you know over the next few weeks the next few months okay so basically we're coming in - three and a half to four percent that's where we are today we're not going to get detailed into some of the vendors today we talked a little bit about that last week and go back to last week's breaking analysis you can see some of that vendor commentary I want to talk about what happens next ETR now we'll go into a two-week quite self-imposed quiet period and really start crunching the data at the end of that quiet period they will release to their private clients the their latest thinking in a webcast after that time we at the cube are allowed to share public information and we're gonna drill down into some of the segments that our community is most interested in but-but-but etrs going quiet now so saga maybe you can explain that sequence and fill in any holes that I missed there yeah no problem the next two weeks so we've we've collected a tremendous amount of data you know we're over you know we're at a hundred fortune 100 organizations you know almost three four hundred global two thousand organizations and so we're at a point now where it's time to start aggregating the data start really analyzing it going through this Koga drill down that we conducted but also we conducted a tremendous study on technology spending intentions of crossing over 350 vendors dozens of Technology sectors and so now it's really a time to kind of drill in and you know what what we're looking for or even some of the biggest takeaways from from this Cove it you know drill down is you know if if you started polling before 3:23 chances are your forecast is gonna come in light and I think that's one of the things that we've learned as we're kind of going into this to hear it is we really want to measure the impact starting right around that 3:23 timeframe it looks right around then based on that time series chart that we showed earlier that's when the market fully understood the impact of this epidemic and so as we start over the next two weeks even though we started pulling a little bit early we really want to focus on that second set a second half of responses because that's probably gonna be more indicative of what's going on I think the second thing is gonna be look if condition of conditions continue to deteriorate things can get worse and so we may come out of the next two weeks with this data that we collected and again have to continue indicating that you know the environment has continued coming down and you know maybe we may have to make adjustments as we see fit so I think that's kind of you know this whole situation is so dynamic still and so we're gonna do our best in the next week and a half to kind of get this data to market to at least give everyone an idea here's how everything stands right now and so that people have a good benchmark and then move forward yeah so this is as close to real time really as you can get in some of this IT spending world saga mentioned some of the numbers and in the global 2000 fortune fortune 100 1000 this this end now just the reminder is up over 1200 I believe right Sahra the total and that you've collected this this month that's correct exactly every time we've been doing one of these it's been going up another a couple hundred respondents so yeah we're at a very comfortable level now our sample right now represents five hundred and fifty five billion dollars in annual IP spend you know and global IT spend every year is a little over you know three trillion so this is a significant significant portion of a global IT spend and we feel comfortable at this point kind of going into that quiet period as you mentioned and really start to dig through the results that you know now that we've kind of you know covered the the 10,000 foot or the macro layer so to speak in terms of where budgets are going now it's really time to start drilling down and do the sectors and vendors because this is this is not going to be a every vendors going down or whatever maybe there's so many different dynamics here some vendors are going to do very well because the work for MoMA infrastructure and I think some vendors are gonna do very poorly because one they're not only on the legacy side but they're not really aligned from this whole work from home infrastructure movement so you're gonna see a lot of bifurcation you know as we get into 53 that's right and we're gonna dig into all those segments we're gonna look at the work from home we're gonna look at the traditional stuff we're gonna look at cloud we're gonna drill into specific segments that are that are of interest to our community it's a pleasure to really have you on here Sagar thank you for for sharing giving us access to this data and and stay safe and we will be watching go to ETR dot plus and you know check out what's happening there Silicon Engel Tom will obviously cover this and I published weekly on wiki bond comm again that saga thanks so much for coming on the cube yeah no problem thank you so much and looking forward to catching up in a few weeks all right then thank you for watching everybody this is Dave a latte for the cube or wiki bounce cube insights powered by ETR we'll see you next time [Music]