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Gartner: A/NZ still outstripping the globe on IT spending growth

31 Oct 2019
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According to the latest Gartner forecast, Global IT spending is expected to rebound in 2020, despite concerns over a recession and companies cutting back on discretionary IT spending, with forecast growth of 3.7%. 

Australia and New Zealand are expected to see growth well above the global forecast.

In Australia, spending on technology products and services is forecast to total A$93.7 billion this year, up 3% from 2018, and grow 4.6% to reach almost A$98 billion in 2020.

Forecast: Spending on IT Products and Services, Australia, 2019-2021 (AUD millions)

Segment

2019

2020

2021

Communication Services

26,862

97,650

27,991

Data Centre Systems

2,961

2,953

2,912

Devices

12,633

12,475

12,516

IT Services

34,370

36,000

37,632

Software

16,878

18,900

21,075

Grand Total

93,705

97,978

102,125

Source: Gartner (October 2019)

In New Zealand, spending on technology products and services is forecast to reach NZ$13.4 billion this year, up 2.3% from 2018, and grow 3.6% to NZ$13.9 billion in 2020.

Forecast: Spending on IT Products and Services, New Zealand, 2019-2021 (NZD millions)

Segment

2019

2020

2021

Communication Services

5,025

5,157

5,300

Data Centre Systems

381

373

374

Devices

1,851

1,750

1,701

IT Services

3,977

4,168

4,379

Software

2,193

2,460

2,744

Grand Total

13,427

13,909

14,497

Source: Gartner (October 2019)

Globally, IT spending is projected to total $3.7 trillion in 2019, an increase of 0.4% from 2018. 

This is the lowest forecast growth in 2019 so far. Global IT spending is expected to rebound in 2020 with forecast growth of 3.7%, primarily due to enterprise software spending.

“The slowdown in IT spending in 2019 is not expected to stretch as far into 2020 despite concerns over a recession and companies cutting back on discretionary IT spending,” says Gartner research vice president John-David Lovelock.    

Today’s complex geopolitical environment has pushed regulatory compliance to the top of organisations’ priority list. 

Overall spending on security increased by 10.5% in 2019, with cloud security projected to grow 41.2% over the next five years. 

“This is not just about keeping the ‘bad guys’ out,” says Lovelock. 

“It is also about the expanding need to be compliant with tariffs and trade policy, intellectual property rights, and even with the multiple and sometimes overlapping privacy laws.”

The device market will see the sharpest spending decline among all segments in 2019, down 5.3% from $713 billion in 2018. 

However, the market is expected to see modest growth of 1.2% in 2020. 

“Similar to how consumers have reached a threshold for upgrading to new technology and applications, technology general managers and product managers should invest only in the next generation of products that will push them closer to becoming a true technology company,” adds Lovelock.

Table 1. Worldwide IT Spending Forecast (Billions of U.S. Dollars)

 

2019 Spending

2019 Growth (%)

2020 Spending

2020 Growth (%)

2021 Spending

2021 Growth (%)

Data Centre Systems

205

-2.5

210

2.6

212

1.0

Enterprise Software

457

8.8

507

10.9

560

10.5

Devices

675

-5.3

683

1.2

685

0.4

IT Services

1,031

3.7

1,088

5.5

1,147

5.5

Communications Services

1,364

-1.1

1,384

1.5

1,413

2.1

Overall IT

3,732

0.4

3,872

3.7

4,018

3.8

Source: Gartner (October 2019)

Gartner predicts that organisations with a high percentage of IT spending dedicated to the cloud will become the recognised digital leaders in the future. 

“Most companies are caught trying to either cut costs or invest for growth, but the top-performing enterprises are doing both. A core challenge facing the industry is how organisations can operate as both a traditional company and a technology company at the same time,” says Lovelock. 

“These ‘and’ dilemmas will drive future IT spending trends.”