Despite uncertainty fueled by recession rumours, Brexit, trade wars and tariffs, we expect global IT spending to remain flat this year
Gartner says world IT spending is projected to total US$3.74 trillion in 2019, an increase of 0.6 per cent from 2018.
This is also slightly down from the previous quarter’s forecast of 1.1 per cent growth, reports Gartner.
In New Zealand, however, spending on technology products and services is expected to reach NZ$13.4 billion in 2019, up 2.3 per cent from last year, to reach almost $15.2 billion in 2022.
A similar trend is forecast in Australia, where spending on technology products and services is expected to reach almost A$93.8 billion in 2019, a 3.1 per cent increase from last year, to reach $107 billion in 2022.
“Despite uncertainty fueled by recession rumours, Brexit, trade wars and tariffs, we expect IT spending to remain flat in 2019,” says John-David Lovelock, research vice president at Gartner.
“While there is great variation in growth rates at the country level, virtually all countries tracked by Gartner will see growth in 2019. Despite the ongoing tariff war, North America IT spending is forecast to grow 3.7 per cent in 2019 and IT spending in China is expected to grow 2.8 per cent.”
“Although an economic downturn is not the likely scenario for either 2019 or 2020, the risk is currently high enough to warrant preparation and planning,” says Lovelock.
He advises technology general managers and product managers to plan out product mix and operational models that will optimally position product portfolios in a downturn should one occur.
Gartner says the enterprise software market will experience the strongest growth this year, reachingUS$457 billion, up 9 per cent from $419 billion in 2018.
Lovelock says CIOs are continuing to rebalance their technology portfolios, shifting investments from on-premise to off-premise.
There are hardly any ‘new’ buyers in the devices market, meaning that the market is now being driven by replacements and upgrades
As cloud becomes increasingly mainstream over the next few years, it will influence ever-greater portions of enterprise IT decisions, in particular, system infrastructure.
Prior to 2018, more of the cloud opportunity had been in application software and business process outsourcing. Over this forecast period it will expand to cover additional application software segments, including office suites, content services and collaboration services, he states.
“Spending in old technology segments, like data centre, will only continue to be dropped.”
Saturation and commoditisation
Globally, Gartner says consumer spending as a percentage of total spend is dropping every year in every region due to saturation and commoditisation, especially with PC, laptops and tablet devices.
Cloud applications allow these devices to have an extended life, with less powerful equipment needed to run new software.
This is why the devices market will experience the strongest decline in 2019, down 4.3 per cent to US$682 billion in 2019.
“There are hardly any ‘new’ buyers in the devices market, meaning that the market is now being driven by replacements and upgrades,” explains Lovelock.
“Add in their extended lifetimes along with the introduction of smart home technologies and IoT, and consumer technology spending only continues to drop.”
Sign up for CIO newsletters for regular updates on CIO news, career tips, views and events. Follow CIO New Zealand on Twitter:@cio_nz
Send news tips and comments to firstname.lastname@example.org @divinap
Join the CIO New Zealand group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.