 From theCUBE Studios in Palo Alto in Boston, connecting with thought leaders all around the world, this is a CUBE Conversation. Hello everybody and welcome to this week's Wikibon CUBE Insights powered by ETR. In this breaking analysis, we want to update you on the latest spending data from ETR. As you know, we've been tracking this weekly. Sagar Kedakia is here. He's the director of research at ETR. Sagar, thanks for coming on. Thanks for having me again, Dave. Really appreciate it. Yeah, so let me remind everybody, so we entered the year this year, 2020 with a consensus IT spend forecast of plus 4%. Once coronavirus hit, ETR launched its latest survey in March and we saw those numbers 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 Sagar, 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 over the last 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 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 to 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 311, you can see how sentiment has declined literally daily as the data rolled in. Then you see the U.S. declared a national emergency, you saw the federal plan leaked for that pandemic projection and obviously New York became a hotspot. And then you can see the stimulus package in it. And Sagar, 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 from home infrastructure. We'll talk about that a little bit, but talk about this event analysis and what you're seeing here and how you compressed the analysis post these events. No problem. So let's start with the 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 IT budgets. What you're seeing here, and if we start with the blue line is we started polling on 311. And on that date, we started to ask, fortune 100s, fortune 500s, how their budget was going to change based on the impacts of COVID-19 versus their original expectations coming into the year. And again, consensus estimates coming into the year were positive 4%. So if you track that line all the way through, you get to a decline of about 1%. Now, what's the issue of starting polling on 311 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. 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 in terms of it could last 18 plus months. And so what we did was we did effectively an event-based analysis or diffused 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 the next shoe dropped in terms of organizations understanding this is not gonna be a few weeks or this is not the common folder flu. Once organizations knew this was gonna 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 right now those scenarios or simulations are taking us between a decline of 3% and 4%. 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 again, it's just a few days since the stimulus was passed. And so let's see if the data starts to improve a little bit or at least stabilize. But I think from the last three events in terms of 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 Fed's action and the fiscal stimulus, 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, et cetera. 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 has held pretty steady at around 20 to 22%. It's roughly in there and the red has been shifting. And you can see most of the green, i.e. spending more in 2020 is focused on that one to 10%. But Sagar, bring us up to date now. We're going to settle in right now about three and a half to 4% 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 to kind of help the audience understand what's going on. So if we were to look at this exact chart since March 11th, 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, 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 mentioned, right? The collaboration tools, the virtualization, IT 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 talked about this 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 impacts based on the data are now starting to be seen. And so, let's see if the stimulus stabilizes this data and we'll continue tracking that over the next few weeks, the next few months. Okay, so basically we're coming in minus three and a half to 4%. 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 will go into a two-week self-imposed quiet period and really start crunching the data. At the end of that quiet period, they will release to their private clients their latest thinking in a webcast. After that time, we at theCUBE are allowed to share public information and we're going to drill down into some of the segments that our community is most interested in, but ETR is 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, we've collected a tremendous amount of data. We're at 100 Fortune 100 organizations, almost 3,400 global 2000 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 COVID drill down that we conducted, but also, we conducted a tremendous study on technology spending intentions across over 350 vendors, dozens of technology sectors. And so now it's really a time to kind of drill in. And what we're looking for, even some of the biggest takeaways from this COVID drill down is, if you started polling before 323, chances are your forecast is going to come in light. And I think that's one of the things that we've learned as we're kind of going into this two week period is, we really want to measure the impact starting right around that 323 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 polling a little bit early, we really want to focus on that second half of responses because that's probably going to be more indicative of what's going on. I think the second thing is going to be, look, if 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, the environment has continued coming down and we may have to make adjustments as we see fit. So I think that's kind of, this whole situation is so dynamic still. And so we're going to 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 to then move forward. Yeah, so this is as close to real time really as you can get in sort of this IT spending world. Sagar mentioned some of the numbers in the global 2000 and the Fortune 1000. This end now, just a reminder, is up over 1200, I believe, right? Sagar, the total end that you've collected this month? That's correct, exactly. Every time we've been doing one of these, it's been going up another a couple of hundred respondents. So yeah, we're at a very comfortable level now. Our sample right now represents $555 billion in annual IT spend and global IT spend every year is a little over three trillion. So this is a significant, significant portion of global IT spend. And we feel comfortable at this point, kind of going into that quiet period, as you mentioned, and really starting to dig through the results that now that we've kind of covered 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 into the sectors and vendors because this is not going to be every vendor's going down or whatever it may be. There's so many different dynamics here. Some vendors are going to do very well because of the work from home infrastructure. And I think some vendors are going to 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 going to see a lot of bifurcation as we get into Q2, Q3. That's right. And we're going to dig into all those segments. We're going to look at the work from home. We're going to look at the traditional stuff. We're going to look at cloud. We're going to drill into specific segments that are of interest to our community. It's a pleasure to really have you on here. Sagar, thank you for sharing, giving us access to this data and stay safe. And we will be watching. Go to etr.plus and check out what's happening there. Siliconangle.com will obviously cover this and I publish weekly on wikibon.com. Again, Sagar, thanks so much for coming on theCUBE. 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 Vellante for theCUBE or Wikibon's CUBE Insights powered by ETR. We'll see you next time.