IT spending in Australia is projected to exceed AU$133 billion in 2024, an increase of 7.8% from 2023, according to the latest forecast by Gartner. Spending on software will see the largest growth with an increase of 12.8% expected in 2024.
Speaking at Gartner IT Symposium/Xpo on the Gold Coast this week, Andy Rowsell-Jones, Distinguished VP Analyst at Gartner said, “This projected IT spending growth in Australia, in the context of an anticipated inflation rate decline to around 3.25% by the end of 2024, suggests that more money will be available to IT departments."
"Despite this, most Australian CIOs are focused on optimising infrastructure and operational costs and efficiencies, by further investing in cloud and digital enablement to deliver higher business outcomes and revenue.”
Investment in cybersecurity and cloud continues
According to Gartner, Australian CIOs are expected to direct the largest amount of new or additional funding in 2024 towards cybersecurity, cloud platforms, data and analytics, and application modernisation.
Rowsell-Jones says, “Given the highly data breaches we’ve seen in Australia over the past 12 months, it’s no surprise that cybersecurity is at the top of the spending list again."
“Every organisation’s risk and audit committee is worrying about a potential cybersecurity fallout and various industry regulators are actively pushing for improved capabilities.”
The Gartner 2023 CIO and Technology Executive Survey indicated that more than 62% of Australian CIOs expected to increase investments in cloud this year, while reducing IT spending in their own data centres. This was reflected by slower growth in data centre systems spending in 2023, experiencing a 6.4% decline, but Gartner forecasts this will rebound to 5.1% growth in 2024.
Rowsell-Jones says, “This turnaround in spending on data centre systems next year in Australia will primarily be driven by increased investments in secure access service edge (SASE) technologies."
“Local CIOs have told us the top two technologies they plan on investing in next year are SASE to simplify the delivery of critical network and security services via the cloud, and generative AI for its potential to improve innovation and efficiencies across the organisation.”
IT services remains largest spending segment
Driven by the increased use of consulting services and infrastructure as a service (IaaS), IT services remains the largest IT spending category in Australia, forecast to reach over $48.8 billion in 2024. This is an increase of 8.2% from 2023, reflecting the increasingly important role IT service providers play in helping organisations in Australia navigate emerging digital opportunities and challenges.
Rowsell-Jones says, “Interest in digital is undiminished, but Australian organisations have become more realistic in their attitudes to it. Rather than trying to become the next digital giant, organisations are investing in digital enablement, either to improve cost and operational efficiencies, or to augment a traditional product set with digital capabilities so they can offer more services.”
Increasing investment in generative AI
According to Gartner, the continued shift to digital in Australia will drive increasing investment in generative AI technologies in 2024, particularly tools for software development and code generation.
However, generative AI will primarily be incorporated into enterprises through existing spending in the long-term, through software, hardware and services they are already using.
Rowsell-Jones says, “Generative AI tools are reducing the barriers to entry for software development, which means more digital capabilities are now lying outside the core IT organisation."
“Australian CIOs should harness this capability and provide the guardrails to support and facilitate business technologists in the wider organisation.”
Gartner’s IT spending forecast methodology relies on analysis of sales by thousands of vendors across the entire range of IT products and services. Gartner uses primary research techniques, complemented by secondary research sources, to build a comprehensive database of market size data on which to base its forecast.