Worldwide IT spending is projected to total $3.9 trillion in 2020, an increase of 3.4% from 2019, according to the latest forecast by Gartner.
Global IT spending is expected to cross into $4 trillion territory next year.
“Although political uncertainties pushed the global economy closer to recession, it did not occur in 2019 and is still not the most likely scenario for 2020 and beyond,” said John-David Lovelock, distinguished research vice president at Gartner.
“With the waning of global uncertainties, businesses are redoubling investments in IT as they anticipate revenue growth, but their spending patterns are continually shifting.”
Global IT spending to increase despite Brexit, recession and tariff rumours, says Gartner
Software will be the fastest-growing major market this year, reaching double-digit growth at 10.5% (see Table 1).
“Almost all of the market segments with enterprise software are being driven by the adoption of software as a service (SaaS),” added Lovelock.
“We even expect spending on forms of software that are not cloud to continue to grow, albeit at a slower rate. SaaS is gaining more of the new spending, although licensed-based software will still be purchased and its use expanded through 2023.”
Table 1. Worldwide IT spending forecast (Billions of US Dollars)
|
|
2019 Spending |
2019 Growth (%) |
2020 Spending |
2020 Growth (%) |
2021 Spending |
2021 Growth (%) |
|
Data Centre Systems |
205 |
-2.7 |
208 |
1.9 |
212 |
1.5 |
|
Enterprise Software |
456 |
8.5 |
503 |
10.5 |
556 |
10.5 |
|
Devices |
682 |
-4.3 |
688 |
0.8 |
685 |
-0.3 |
|
IT Services |
1,030 |
3.6 |
1,081 |
5.0 |
1,140 |
5.5 |
|
Communications Services |
1,364 |
-1.1 |
1,384 |
1.5 |
1,413 |
2.1 |
|
Overall IT |
3,737 |
0.5 |
3,865 |
3.4 |
4,007 |
3.7 |
Source: Gartner (January 2020)
Growth in enterprise IT spending for cloud-based offerings will be faster than growth in traditional (noncloud) IT offerings through 2022. Organisations with a high percentage of IT spending dedicated to cloud adoption is indicative of where the next-generation, disruptive business models will emerge.
“Last quarter, we introduced the ‘and’ dilemma where companies are challenged with cutting costs and investing for growth simultaneously. Maturing cloud environments is an example of how this dilemma is alleviated: Organisations can expect a greater return on their cloud investments through cost savings, improved agility and innovation, and better security. This spending trend isn’t going away anytime soon.”
Gartner says IT spending in EMEA will return to growth in 2020
The strong US dollar has become a deterrent to worldwide IT spending on devices and data centre equipment in effected countries. “For example, mobile phone spending in Japan will decline this year due to local average selling prices going up as a result of the US dollar increasing. The UK’s spending on PCs, printers, servers and even external storage systems is expected to decline by 3%, too,” said Lovelock.
IT spending in Western Europe during 2020 and 2021 will mirror that of the US after the recession, which ended in 2009.
“2019 was a challenging year for IT spending in Western Europe and full of business uncertainty, similar to the 2009 recession in the US,” continued Lovelock.
“In 2020, business confidence will not fully return, and neither will IT budget growth. However, there will be an expectation for IT to drive business.”
As a result, IT departments will defer expensive projects, strive to make cost savings where they can, and rely more on “as a service” offerings. The software as a service (SaaS), platform as a service (PaaS) and infrastructure as a service (IaaS) sectors will each exhibit IT spending growth above 10% in 2020 and 2021, whereas spending in the PC, server and storage sectors will decline.
Despite last quarter showing the sharpest decline within the device market among all segments, worldwide IT spending will return to overall growth in 2020 due to the adoption of new, less-expensive phone options from emerging countries.
“The almost $10 billion increase in device spending in Greater China and Emerging Asia/Pacific is more than enough to offset the expected declines in Western Europe and Latin America,” concluded Lovelock.
