Why Gartner predicts 2.7 per cent rise in NZ tech spending for 2017

Why Gartner predicts 2.7 per cent rise in NZ tech spending for 2017

Enterprise software is fastest growing category of spending, according to Gartner's latest worldwide IT spending forecast

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New Zealand technology spending is forecast to reach almost NZ$11.8 billion in 2017, an increase of 2.7 per cent from last year, reports Gartner.

Across the globe, IT spending is projected to total US$3.5 trillion this year, a 2.4 per cent increase from 2016.

This growth rate is up from the previous quarter's forecast of 1.4 per cent, due to the US dollar decline against many foreign currencies, the analyst firm reports in its latest Gartner Worldwide IT Spending Forecast.

The quarterly forecast covers major technology trends across the hardware, software, IT services and telecom markets.

"Digital business is having a profound effect on the way business is done and how it is supported," says John-David Lovelock, vice president and distinguished analyst at Gartner.

"The impact of digital business is giving rise to new categories; for example, the convergence of ‘software plus services plus intellectual property’," says Lovelock, in a statement.

“These next-generation offerings are fueled by business and technology platforms that will be the driver for new categories of spending.

“Industry-specific disruptive technologies include the Internet of Things (IoT) in manufacturing, blockchain in financial services (and other industries), and smart machines in retail. The focus is on how technology is disrupting and enabling business."

Gartner forecasts the worldwide enterprise software market to grow 7.6  per cent in 2017, up from 5.3  per cent growth in 2016.

As software applications allow more organisations to derive revenue from digital business channels, there will be a stronger need to automate and release new applications and functionality.

"With the increased adoption of SaaS-based enterprise applications, there also comes an increase in acceptance of IT operations management (ITOM) tools that are also delivered from the cloud," says Lovelock.

"These cloud-based tools allow infrastructure and operations (I&O) organisations to more rapidly add functionality and adopt newer technologies to help them manage faster application release cycles.

“If the I&O team does not monitor and track the rapidly changing environment, it risks infrastructure and application service degradation, which ultimately impacts the end-user experience and can have financial as well as brand repercussions."

Gartner notes IT spending increased in 2016, but only two of the top 10 IT vendors posted organic revenue growth.

With revenue sources still tied to the nexus of forces (the convergence of social, mobility, cloud and information), some of the top 10 vendors will fare better in 2017 due to strength in mobile phone sales.

Worldwide spending on devices (PCs, tablets, ultramobiles and mobile phones) is projected to grow 3.8  per cent in 2017, to reach US$654 billion.

This is up from the previous quarter's forecast of 1.7  per cent, according to Gartner.

Mobile phone growth will be driven by increased average selling prices for premium phones in mature markets due to the 10th anniversary of the iPhone and the increased mix of basic phones over utility phones.

However, the tablet market continues to decline, as replacement cycles remain extended.

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