16 Jan Gartner: Software leads the way as global IT spending to hit $3.9 trillion in 2020
Political uncertainties aside, worldwide IT spending is projected to hit $3.9 trillion this year, which would be a 3.4% increase over 2019, according to Gartner. Gartner predicts that global IT spending will cross the $4 trillion threshold in 2021.”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, research vice president at Gartner, in a statement. “With the waning of global uncertainties, businesses are redoubling investments in IT as they anticipate revenue growth, but their spending patterns are continually shifting.”
Enterprise software is poised to be fastest-growing major market segment this year, reaching double-digit growth of 10.5% for a total of $556 billion. Lovelock pointed out that the enterprise software growth was primarily due to the increased adoption of software-as-a-service (SaaS) offerings. Enterprises are putting applications, such as Office 365 and Salesforce, into the cloud with companies such as Amazon Web Services to allow their employees to access their data from anywhere with a connection.
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“We even expect spending on forms of software that are not cloud to continue to grow, albeit at a slower rate,” Lovelock said. “SaaS is gaining more of the new spending, although licensed-based software will still be purchased and its use expanded through 2023.”
Not surprisingly, Gartner said that growth in enterprise IT spending for cloud-based offerings will be faster than traditional, non-cloud IT offerings over the next two years. Organizations that are putting a large chunk of their IT budgets towards cloud adoption will be well positioned to take advantage of emerging disruptive business models.
“Last quarter, we introduced the ‘and’ dilemma where enterprises are challenged with cutting costs and investing for growth simultaneously,” Lovelock said. “Maturing cloud environments is an example of how this dilemma is alleviated: Organizations 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.”
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At the start of last year, Gartner predicted that data center spending would increase 4.2% to $210 billion. Instead, data center spending was down to almost 3% to $205 billion. For this year, Gartner is projecting data center growth of 2% on spending of $212 billion. Gartner cited the strong U.S. dollar as one factor for decreased data center spending last year in the impacted countries.