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62% of UK businesses forge ahead with expansions despite economic concerns and supply chain challenges

62% of UK businesses forge ahead with expansions despite economic concerns and supply chain challenges

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New findings from an Equinix survey reveal some key insights into the UK IT industry, showing that global growth is underpinned by significant investment in digital with nearly half of businesses expanding into new markets virtually via the cloud.

Businesses around the world are planning major investments in digital technologies to support ambitious expansion plans following lessons learned from the pandemic. New findings from an annual survey of technology decision-makers, by Equinix, suggest a movement towards a less connected world could not be further from the plans of digital leaders across industries and geographies. Despite concerns of a potential looming recession and talk at the World Economic Forum in Davos about the end of globalisation, businesses appear to remain bullish about their plans for further global expansion.

Of the 2,900 IT decision-makers surveyed globally in the Equinix 2022 Global Tech Trends Survey, 72% of respondents indicated their organisation is planning to expand in the next 12 months, into either a new city (31%), a new country (33%), or a new region entirely (38%).

The global sentiment was echoed by UK-based IT decision-makers, with 43% planning expansion into a new region; 31% into a new country; and 26% into a new city. Overall, however, tech decision-makers in EMEA were less ambitious in terms of expansion plans, with 59% planning to expand into a new market in the next year — perhaps reflecting more caution around economic factors. By contrast, IT leaders in APAC and in the Americas were more optimistic in this regard, with 82% and 78% intending to expand across geographies.

A number of potentially limiting factors were identified by businesses when it came to global growth, with supply chain challenges highlighted as a particular area of concern. Over half (59%) said their business was plagued by global supply chain issues and shortages, while 58% specified the global microchip shortage as a threat to their business.

These continued supply chain issues appear to be driving a need for more virtualisation, with growth aspirations underpinned by significant planned investment in digital infrastructure. Almost half (47%) of respondents globally said they plan to facilitate global expansion plans by deploying virtually via the cloud, while the UK came in at a lower 40%. More than a quarter (26%) of IT leaders surveyed said they would achieve expansion using a bare metal solution, which was matched in the UK. Meanwhile, 47% both in the UK and globally said they expect increased spending on carrier-neutral colocation solutions to facilitate the planned rise in digital deployments, while even more (59% globally; 61% in the UK) said they intend to increase investment ininterconnection services as they plan to progress Digital Transformation and build resilience.

The pandemic also continues to have a significant impact on businesses’ digital strategies. More than half of global and UK IT leaders (52% and 57% respectively) say they are accelerating their company’s digital evolution because on the COVID-19 crisis. Indeed, over half (54% globally and 56%) confirm their IT budgets have increased as a direct outcome of its legacy — an insight into the now broadly acknowledged necessity for robust digital infrastructure to pivot to evolving business needs in an instant. Furthermore, the majority of respondents (61% globally and 62% in the UK) believe the technology changes and investments implemented during the pandemic are here to stay.

“The pandemic has seen truly impressive innovation and incredible acceleration of digital evolution globally, and EMEA is no different,” said Russell Poole, Managing Director for Equinix in the UK. “These results highlight more lingering caution felt by IT leaders in EMEA than their counterpart regions — not unexpectedly. While 59% of EMEA respondents intend to expand into new geographies, the UK is tracking slightly higher at 62%, which is hopefully indicative of further growth and transformation to come, despite recent adversity.

“While there have been innumerable challenges over the last two years, the survey reveals some positives that can be taken,” said Poole. “[These include] more than half of UK respondents confirming their digital evolution has accelerated and IT budgets have increased as a lasting result, as well as 62% reporting the changes made under duress in a time of need were sound decisions that will remain in place at a time when many businesses pan-industry are reconsidering hastily implemented systems.

“It remains an exciting time in the rapidly evolving tech sector, as all regions reported growth and increased investment and planning around new technologies from 5G to Web 3.0, the IoT and XaaS. Equinix remains committed to support our digital partners in their evolutionary journeys through the utilisation of the multiple problem-solving platforms we offer,” concluded Poole.

There remain, however, significant concerns around cybersecurity. Ensuring expansions are supported by resilient digital models is business-critical, particularly at a time of increasing volatility and emerging global threats. As part of their digital-first strategies, 85% of respondents confirmed a key priority is improving cybersecurity. A large proportion (84%) said complying with local market data regulations is critical, while 83% highlighted the need to future-proof their businesses. According to IT specialists, the most feared threats were cyberattacks, security breaches and data leaks (all 70%).

In addition, the survey revealed:

  • Customer and employee experience prioritised: Recognising digital adoption affects end-users, 86% of UK digital leaders (83% globally) said enhancing customer experience was a priority. Companies also acknowledged improving employee experience is critical to their transformation journey and retention of talent, with 92% (81% globally) citing this.
  • Cloud migration continues: 82% of UK IT leaders (71% globally) said they plan to move more business functions to the cloud. Of those respondents, 49% of UK respondents (50% globally) plan to move more of their business-critical applications to the cloud and almost half (46%; 49% globally) intend to move security functions to the cloud.
  • Hybrid cloud dominates: Hybrid cloud models were the preferred approach for 36% of UK leaders (38% globally), but 20% (22% globally) of digital leaders globally still rely on a single cloud provider or none at all. Interconnection may step in to help here, with 35% (globally and in the UK) of respondents believing it increases flexibility of connectivity and 35% (30% globally) reporting they use it to enable hybrid multi-cloud.
  • Investing in innovation:Many IT leaders are looking to future-proof their businesses and take full advantage of evolving technologies, such as 5G, the Internet of Things (IoT) and Web 3.0. A total of 68% of digital leaders in the UK (71% globally) said they are moving to an Everything-as-a-Service (XaaS) model, citing the simplification of IT infrastructure (71% in the UK; 65% globally), improved user experience (59% in the UK; (54% globally); and flexibility (53% UK; 56% globally) as the key reasons for doing so.
  • Focusing on sustainability: While innovating, digital leaders are keeping a close eye on the sustainability of their IT infrastructure. A large number (77%) of UK respondents (67% globally) say they are measuring and actively trying to limit the environmental impact of their IT equipment and 78% (65% globally) will only work with IT partners who can meet key carbon reduction targets. Indeed, 82% (69% globally) report sustainability is now one of their organisation’s most important drivers with commitments made to science-based targets.
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