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IT Industry Take Heart: Gartner Sees a Spending Hike Ahead

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IT Industry Take Heart: Gartner Sees a Spending Hike Ahead

October 20, 2016
By Steve Anderson
Contributing Writer

If it's starting to look like most every industry out there is living on borrowed time, don’t worry, a reason for good cheer recently emerged from the files of Gartner (News - Alert). If you're in the information technology (IT) industry, it might be a good time to ask for a raise, as Gartner projects spending on IT will increase 2.6 percent in 2017. That's up a good chunk from 2016, where spending actually went down a bit.

The biggest growth sectors will be in software and IT services, which will combine to raise the global IT spend to around $3.49 trillion. The spend between 2015 and 2016, once 2016 concludes, should drop by about 0.3 percent. Primary blame for that drop is being pinned on Brexit, without which the market would have seen an overall modest increase.

Motivations for the gain, meanwhile, are comparatively simple. The good news here is that companies have stopped regarding IT as a cost center and more as a necessary vector for growth. So those businesses eager to expand will do so in large part by greater IT spending. As more corporations enhance digital operations, the end result will mean more software and IT capability, which means more spending. While businesses are still in many cases eager to cut costs, the money saved is being re-invested to augment IT capability.

While 2016 did see some gains over the previous years, particularly in software and services, there was also a drop in device spending and a smaller drop in communications services. However, Gartner projects that these numbers will come back, with even device spending seeing a bit of gain to ultimately reach the $600 billion mark.

Those who think the Presidential elections may have an impact will prove disappointed, however, as interest rates tend to have a greater impact than Washington leadership when it comes to IT spending. That's likely because there are many fewer regulations on IT use than there are on hiring and firing regular people. As for growth by area, the developing nations will do the biggest spending, with Asia-Pacific, sub-Saharan Africa and greater China showing the biggest gains. North America, meanwhile, will be seen as a “middle performer,” lagging in devices but gaining in services and software.

With increasing moves seen toward network functions virtualization (NFV), virtual network functions (VNF), and cloud-based systems, among many others, it's not unreasonable to project big growth in software and services. Granted, devices will always be part of the picture—software without hardware is just a big wall of text no one can really read—but it's the things that run on such devices that will post the biggest gains.

This could be very good news for those in the software and services sector, and most of the market will see at least some gains. The year 2017 might be very good afoot, and after the last couple of years, the arrival of good news will be welcome.

Edited by Alicia Young

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