Dive Brief:
- Enterprise IT spending is projected to reach $4.6 trillion worldwide in 2023, a year-over-year increase of 5.1%, according to a Gartner report released Wednesday.
- Spending on software will get the biggest bump, with Gartner forecasting an 11.3% increase in 2023; spending on PCs and other devices is predicted to decline by just over half a percentage point year over year.
- “CIOs proved that they had the solutions to problems in 2020,” said John-David Lovelock, distinguished VP analyst at Gartner. “Now, CEOs and CFOs are going back to CIOs to help them solve problems and giving them more money to help other departments save money.”
Dive Insight:
Economic slowdown, persistent inflation and concerns over a potential recession may be pushing companies to trim overall spending. But IT budgets continue to show resilience, due in large part to expected returns on technology investments.
The last several years have taught companies that cloud migration, data analytics and AI technologies are a bridge to optimization, efficiency gains and cost savings. Most are willing to continue their modernization journey, not just in spite of current economic realities, but because of them.
Customer-facing IT and using technology to create revenue-generating products and services were a priority for companies this year, Lovelock said.
“Organizations that [were] trying to transform themselves and their industry — the ones that want to be able to do something that others aren’t doing — were investing in outward facing IT, new ways to get in front of customers more frequently, more meaningfully, and for longer periods of time,” said Lovelock.
Now, companies that haven’t already modernized internal business functions are turning in that direction, to areas such as finance and supply chain, according to Lovelock.
“CFOs are putting out new money for business transformation and adding inward-focused modernization,” Lovelock said. “They’re asking, ‘Can we change the supply chain? Can we change customer interactions? Can we change our internal processes to reduce cost or allow them to scale without the intervention of people?’”
It’s a move that will favor cloud, but not a complete shift.
“We have to be careful about the word shift because the on-prem world isn't going away,” Lovelock said. “It's not even getting smaller. In fact, back in 2011, 2012 or 2013, companies would have been jealous [of] the growth rates we’re now seeing in the on-prem environment.”
