2020 budget cuts in other departments a windfall for IT, Gartner says

Dive Brief:

Worldwide IT spending is projected to bounce back from the 2020 contraction, growing across all segments to reach $4.1 trillion in 2021, an 8.4% increase over 2020 spending, Gartner announced Wednesday.
Pandemic recession recovery has taken a K shape, where some sectors, including government, insurance and banking, are spending in line with pre-pandemic levels, according to John-David Lovelock, distinguished research VP at Gartner. Other segments, such as transportation, wholesale, retail and parts of education, are not projected to reach recovery levels until 2023.
In 2020, for the first time, IT benefited from spending cuts in other departments. "In normal bad times, we take money out of IT and we put it into other departments," such as sales, marketing or product development, Lovelock said. As companies plan office returns or hybrid work setups, one of the main questions going forward centers on facility and office spending.

Dive Insight:

The spending increases expected across all segments are signs of recovery, but they also highlight the need to catch up from 2020 budget cuts.

Last year, IT spending worldwide shrunk 2.2%, declining across all segments, with an outsized effect on devices investments, which contracted 6.9% from pre-pandemic levels, according to Gartner data.

Spending growth in 2021 is led by the devices segment, which Gartner projects will expand by 14% this year to reach $755.8 million.

Devices are a "lumpy growth" segment, Lovelock said. Growing 3.1%, projected in 2022, is more in line with expected increases. The 14% growth spurt is "catching up" on the investments put off last year.

Companies deferred device investments in 2020, extending the technology lifecycle to offset expenses and save cash, he said.

Companies flipped a legacy segment by pivoting to cloud-based systems. Cloud surpassed data center spending for the first time in 2020, data from Synergy Research Group shows. Businesses made a drastic reduction in data center spending, contributing to aggressive cloud growth.

Businesses made quick decisions on technology products, choosing systems to get by before identifying long-term solutions. As companies consider office returns and rethink investments, organizations will also work to identify what technology works best for their company and lets them innovate.

This marks a pivot from just getting by, a default for business in the early pandemic scramble. Now IT decision makers have a better understanding of what to expect in 2021 and can start determining what will fit in their technology portfolio.

Part of the tool consideration is making the stack secure, according to Lovelock. Companies will make an "election of fewer products with bigger product offerings and feature functionality."