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Worldwide IT spending to grow again in 2017 – but it’s not all good news

By Ashton Young
Fri 14 Jul 2017
FYI, this story is more than a year old

A new release from Gartner has forecast worldwide IT spending to jump 2.4 percent in 2017.

This equates to a whopping total of $US3.5 trillion, representing an increased growth rate from the previous quarter’s forecast of 1.4 percent due to the US dollar decline against many foreign currencies.

"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."

Lovelock asserts 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,” says Lovelock.

“The focus is on how technology is disrupting and enabling business."

The worldwide enterprise software market is one of the main drivers behind the growth in IT spending with a forecast rise of 7.6 percent in 2017, up from 5.3 percent in 2016.

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

Lovelock says 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.

"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,” says Lovelock.

“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."

Despite IT spending increasing in 2016, only two of the top 10 IT vendors posted organic revenue growth – the top five includes Apple, Samsung Vendor Group, Google, Microsoft and IBM respectively.

However, Gartner says 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 devices (PCs, tablets, ultramobiles and mobile phones) is projected to grow 3.8 percent in 2017 to reach $654 billion, which more than doubles the previous quarter's forecast of 1.7 percent.

The main driving forces behind the growing mobile phone market are expected to be the increased average selling prices (ASPs) for premium phones in mature markets due to the 10th anniversary of the iPhone and the increased mix of basic phones over utility phones.

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

In Australia, total technology spending is forecast to top A$83.1 billion this year, an increase of 3.7 percent from 2016, while in New Zealand it is forecast to reach NZ$11.8 billion, an increase of 2.7 percent from last year - both values exceeding the global average.

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