IT Spending Inches Toward $4 Trillion -- THE Journal

Information Technology

IT Spending Inches Toward $4 Trillion

By David Nagel
04/02/13

Worldwide IT spending grew to $3.618 trillion last year and is projected to increase by about $150 billion per year through 2014, when it will come just shy of $4 trillion, according to a new report released by market research firm Gartner.

Overall IT Spending
According to The Gartner Worldwide IT Spending Forecast, overall worldwide IT spending will grow 4.1 percent this year to $3.766 trillion — nearly double the growth rate from the previous year (2.1 percent). And that growth will remain fairly steady through 2014 at 4 percent, reaching $3.917 trillion.

According to Gartner, the global economic situation continues to fetter further growth in IT spending.

"Although the United States did avoid the fiscal cliff, the subsequent sequestration, compounded by the rise of Cyprus' debt burden, seems to have netted out any benefit, and the fragile business and consumer sentiment throughout much of the world continues," said Richard Gordon, managing vice president at Gartner. "However, the new shocks are expected to be short-lived, and while they may cause some pauses in discretionary spending along the way, strategic IT initiatives will continue."

IT Spending by Category
Broken down by category, devices are expected to see strong growth over the next two years, as are enterprise software and data center systems. However, looking more closely, what those categories represent is changing.

"The global steady growth rates are a calm ocean that hides turbulent currents beneath," said John Lovelock, research vice president at Gartner, in a prepared statement. "The Nexus of Forces — social, mobile, cloud and information — are reshaping spending patterns across all of the IT sectors that Gartner forecasts. Consumers and enterprises will continue to purchase a mix of IT products and services; nothing is going away completely. However, the ratio of this mix is changing dramatically and there are clear winners and losers over the next three to five years, as we see more of a transition from PCs to mobile phones, from servers to storage, from licensed software to cloud, or the shift in voice and data connections from fixed to mobile."

Devices reached $665 billion in 2012 — up 9 percent over the previous year. That category is expected to grow another 7.9 percent this year (to $718 billion) and 5.7 percent in 2014 (to $758 billion). "Despite flat spending on PCs and a modest decline in spending on printers, a short-term boost to spending on premium mobile phones has driven an upward revision in the devices sector growth for 2013 from Gartner's previous forecast of 6.3 percent," Gartner reported.

Enterprise software as a category grew 3.5 percent in 2012, reaching $279 billion. It's expected to climb another 6.4 percent this year (to $297 billion) and 6.7 percent in 2014 (to $316 billion). The major drivers in this category include database management systems, data integration tools, and supply chain management, according to Gartner.

Gartner lowered its previous forecast for data center systems slightly. This category hit $141 billion in 2012, up just 1.9 percent. Growth will increase slightly in the next two years, 3.7 percent in 2013 ($146 billion) and 4 percent in 2014 ($152 billion).

The second-largest category tracked by Gartner, IT services, reached $878 billion in 2012, representing 1.5 percent year-over-year growth. That will pick up considerably over the next two years, Gartner predicted: 4.5 percent in 2013, reaching $918 billion, and 4.9 percent in 2014, reaching $963 billion. "While the outlook for IT services remains relatively unchanged since last quarter, continued hesitation among buyers is fostering hypercompetition and cost pressure in mature IT outsourcing (ITO) segments and reallocation of budget away from new projects in consulting and implementation," according to Gartner.

The largest category, telecom, was the only category to experience a decline in 2012. Telecom hit $1.655 billion in 2012, a slight decline of 0.4 percent. Gartner forecast modest growth for telecom over the next two years: 2 percent in 2013 ($1.688 trillion) and 2.4 percent in 2014 ($1.728 trillion).

Additional details about the IT spending forecast can be found on Gartner's site. Additionally, Gartner held a webinar on the forecast today, hosted by Gartner's Lovelock, research vice president at Gartner. The webinar is available on demand with registration on Gartner's webinar portal.

About the Author

David Nagel is the former editorial director of 1105 Media's Education Group and editor-in-chief of THE Journal, STEAM Universe, and Spaces4Learning. A 30-year publishing veteran, Nagel has led or contributed to dozens of technology, art, marketing, media, and business publications.

He can be reached at [email protected]. You can also connect with him on LinkedIn at https://www.linkedin.com/in/davidrnagel/ .

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