Dive Brief:
- Global IT spending is projected to reach $3.9 trillion in 2020, a 3.4% increase year-over-year, according to Gartner's projections. Growth continues despite global political uncertainty and threats of a recession; the market is set to top $4 trillion in 2021.
- Spending intentions center around software, which is expected to grow 10.5% to $503 billion this year, according to Gartner. In contrast, spending on devices continues to slip. The device market shrunk 4.3% in 2019 and is expected to have 0.8% growth this year before contract again in 2021.
- North America remains one of the "rosier" markets for growth, with spending projected to increase 4.3%, John-David Lovelock, research vice president at Gartner, told CIO Dive. Despite the trade war, China can expect 5.6% growth in 2020. "This is not an economy that is suffering tremendously from those tariffs." While the trade wars affected its GDP, it did not impact its commitment to IT.
Dive Insight:
Ahead of 2020, Gartner warned CIOs to prepare for the "turns," instances of disruption that define a business's ability to succeed long-term. Moments of economic uncertainty can spark reactionary budget constriction, but delays in investing in modernization could doom a business.
Take Brexit. Western Europe's reaction will impact spending, with companies focusing on cost savings, deferring purchases when possible and using software as a service rather than upfront, traditional payment schemes, according to Lovelock.
Long-term success comes from where companies plan to invest in the year ahead. Businesses are cost optimizing in the traditional software license market, which is why the market continues to grow.
The spending forecast boils down to an increase in "soft" and a decrease in "hard" technology spending. The cloud, floating above it all, trims growth from traditional spending areas, not killing markets altogether.
"The softer something is, the more people tend to be liking it," Lovelock said. "Software is good. Cloud is great. Consulting services? Okay. Servers, PCs, printers hard — not so much."
Companies are adopting more nimble technology stacks, which is driving growth in the cloud. But "hard things" such as data centers and mobile phones are diving off, Lovelock said. "That's a typical reaction to, 'we think the worst is over, but we're not sure.'"
