Democracy, demonetization and debudgetization

February 01 of 2017 was the D-Day for the Indian Government and its citizens.

Not only because of the advanced date of the annual Union Budget of India from age-old custom of February end. But it was also the first budget to be announced within three months of the revolutionary demonetization move by the Government.

One of world’s largest democracy announcing demonetization and union budget in short succession is a rather brave move. Finance minister Arun Jaitley,  presenting Union Budget 2017 in Parliament, stated that effects of demonetisation are not expected to spill over to the next year and that the pace of remonetisation had picked up.

Economic Survey, unveiled a day before the presentation of the Union Budget, gave a moderate picture for 2016-17 mainly due to a weaker second half. Jaitley also underlined GDP will be bigger, cleaner after demonetization and that there will be only transient impact on the economy due to demonetization.

The union budget appears to have the necessary arsenal to sustain GDP growth at over 7 per cent as opposed to the earlier 7.5 per cent projection.

But the IT budgets allocation for the next fiscal by Indian companies in April 2017 might be very different than in the past. For some verticals like manufacturing, FMCG, auto, IT/ITes to name a few, sales at the ground level (urban and/or rural) have been impacted due to demonetization. The exact losses of some of those affected companies is unknown yet.

This however might not be a good news for IT industry at large because there could be some restrictions or massive reductions on the purchase of enterprise technology in their budget plans for the next fiscal. There might be debudgetisation (or less budgets) at many Indian organizations when the new fiscal kicks in on April 01.

The traditional or the ongoing IT business model across companies I believe would turn right on its head due to the aftermath of demonetization and impetus on digital initiatives highlighted in Union Budget 2017. 

The traditional or the ongoing IT business model across companies I believe would turn right on its head in the aftermath of demonetization and impetus on digital initiatives highlighted in Union Budget 2017. This would have a ripple effect across the enterprise IT ecosystem of technology OEMs, channel partners and CIOs / buyers of technology.  

The IT budgets at Indian Inc. at large would have different flavors in 2017 (post demonetization and union budget) that include:

– Aggressive shift of the on-prem IT budgets into app based initiatives.  

– Security budgets to increase due to the  Government’s emphasis on cybersecurity.

– CIOs and CTOs to turn their companies into ‘digital enterprises’ faster than ever.

– Capex to fade away and make a wide path for different ‘opex’ models to buy IT.

– Cloud to be loud with benefits of agility, time to market and cost-factor.

– IT Budgets to emerge more and diversely from BU/LOB than traditional IT teams.

– Data to be the ‘real’ new oil to be protected, analyzed and monetized.

– Mobile-first will no longer be an afterthought for modern companies.

– ‘Everything-as-a-service’ as the norm beyond IaaS, SaaS, PC-as-a-service.

–  Onus on AI, Machine learning, VR/AR to gain a competitive advantage.

The innovation budgets might not come up for some companies as they would prefer ‘lights on’ budgets in case they have been severely impacted by demonetization. The `brave’ organizations might unleash innovation budgets and plunge into new technologies like IoT, SDDC, and Blockchain to overcome their shortcomings since November 08, 2016. Finding the optimal right balance of ‘Lights On’ and ‘Innovation’ budgets for maximum returns in 2017 will be a goldmine for CIOs, CEOs and business stakeholders of the organizations.

Finding the optimal right balance of ‘Lights On’ and ‘Innovation’ budgets for maximum returns in 2017 will be a goldmine for CIOs, CEOs and business stakeholders of the organizations.

The IT ecosystem of channel partners and CIOs have been fairly optimistic of the IT budgets of India Inc. for next fiscal. State of the CIO Survey 2017 done by CIO India with 236 IT decision makers of India in October and November 2016 reveal that more than half of the respondents expect a decent increase in IT budgets at their companies. Almost three fourth of channel partners (mainly enterprise SIs) in a separate survey conducted by ChannelWorld known as State of The Market 2017 also expect IT budgets at their customers’ end to grow for fiscal 2017-2018.

Demonetization might not be directly involved per se with the increase or decrease of IT budgets for India Inc. But IT landscape will not be the same by the end of the calendar year.

There will more cloud, more big data, more robotics, more opex, more cybersecurity in the modern world of app economy.

Blame it on demonetization and its debudgetisation effect on this year’s union budget.

But it’s always good to change the gears of IT to run your business speedily to success.