Metaverse wins for enterprise services spend as caution tightens belts

When we have to contend with the destabilizing impact of real-world events—such as war, rocketing fuel prices, talent crises, and catastrophic earthquakes in Turkey and Syria—a virtual world alternative looks like an increasingly smart alternative. HFS Pulse H1, 2023 asked 592 Global 2000 enterprise leaders about the emerging technologies they plan to increase or decrease services spending on over the next two years. We found only the metaverse and low code immune from cuts in spending on third-party services. Here’s the detail behind the weighted averages shown in our chart.

• All (100%) of those surveyed say they will increase their spending in the metaverse over the next two years. Nearly half (47%) are ready to increase by 10% to 20%, and a further 40% will increase by 5% to 10%. The remaining 13% intend to invest a more cautious 1% to 5%. Given global inflation rates, those last 13% are unlikely to be ramping up activity. Investment in closely-related augmented reality and virtual reality is predominantly at the broadly static end of the scale—36% opting for just a 1% to 5% increase and 32% saying “no change.”
• Low code is the second biggest winner, with 4 in 5 (80%) enterprises increasing their investment as they seek ways around the bottlenecks in development that talent shortages cause. Even so, 32% only intend to increase spending by 1% to 5%. That’s unlikely to mean a raft of new projects in their case. Twenty percent (20%) aren’t increasing spending at all.
• The biggest loser is the internet of things (IoT), with 89% intending to reduce spending vs. 32% increasing. Given the metaverse’s growth, IoT spending will likely bounce back in the long term.
• Even the recession-friendly promise of process automation is not enough for related third-party services spending to avoid a bumpy road ahead, with 50% increasing spending but as many enterprises opting for no change or cuts. This may be a result of relative maturity in the cases of those slowing their spending, as enterprises that have already committed look for increased returns from automation investments.

The Bottom Line: Caution is the watchword. Yes, everyone is backing the metaverse, but they aren’t betting the farm.

Even the winners aren’t winning big. While 100% of surveyed enterprises are committed to growing their investment in third-party metaverse services, none are committing to an increase of 20% or more. Given that most organizations are starting with a relatively small metaverse pot, increases of anything less will be little more than a rounding error in many IT budgets. Caution is definitely the watchword.

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