Dive Brief:
- Global spending on IT is expected to increase 4% this year, reaching $4.4 trillion as executives respond to rising risks and seek to grow revenues, a report from Gartner released Wednesday shows.
- Spending on software is forecasted to reach $675 billion, rising 9.8% this year and another 11.8% in 2023.
- Risk factors — including geopolitical tensions, inflation and supply chain disruptions — are leading businesses to reassess their IT stance, often boosting spending instead of dialing back as they did in 2020, said John-David Lovelock, distinguished research VP at Gartner.
Dive Insight:
Complex pressures in recent years, including the pandemic and war in Ukraine, shone a spotlight on IT for businesses everywhere.
"When technology becomes the business, when it becomes the thing that is generating the revenue, or the revenue cannot be generated without it, IT now scales with revenue directly," Lovelock said.
The Bloomberg Digital Economy Index, also published Wednesday, found six in 10 companies will increase their technology spending in the next year.
The trend has legs: Two in five CIOs and CxOs also project their IT budgets will grow between 6% and 15% in the next three to five years, according to Info-Tech Research Group.
Responding to risk, companies are channeling cash where they can ease operational constraints and boost cash flow. Analytics, for example, can aid companies seeking a wide range of outcomes, from segment optimization to deeper transformations, Lovelock said.
With executives eyeing longer-term projects, the dearth of IT job candidates is also driving spending.
IT unemployment is hovering near record-lows, according to CompTIA's review of U.S. Bureau of Labor Statistics data for March. The unemployment rate for tech occupations was just 1.3%, the lowest since June 2019 and trailing the general U.S. unemployment rate by 2.3 percentage points.
Lovelock said, CIOs are "now forced to do more outsourcing of commoditized IP operations."
Neiman Marcus Group is one example of a company boosting IT spending. The firm, which just appointed a new CTO, launched a three-year, $500 million investment plan which includes internal technology upgrades and acquisitions.
