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Thursday, January 19, 2017

Digital Transformation Projects Drive New IT Investment

In today's economy, information technology (IT) is the essential foundation for new digital business transformation projects. It's also the open innovation platform that enables an enterprise to harness the collective capabilities of their commercial ecosystem that's online.

Worldwide IT spending is projected to total $3.5 trillion in 2017, a 2.7 percent increase from 2016, according to the latest market study by Gartner. However, this overall global growth rate is down slightly from earlier projections of 3 percent.

IT Infrastructure Market Development

"2017 was poised to be a rebound year in IT spending. Some major trends have converged, including cloud, blockchain, digital business and artificial intelligence. Normally, this would have pushed IT spending much higher than 2.7 percent growth," said John-David Lovelock, research vice president at Gartner.

However, Gartner analysts believe that some of the political uncertainty in global markets has fostered a wait-and-see approach causing some enterprises to forestall IT investments. That being said, forward-thinking companies will see the current environment as an opportunity to move ahead of their peer group.

Worldwide devices spending -- PCs, media tablets, smartphones -- is projected to remain flat in 2017 at $589 billion. A replacement cycle in the PC market and strong pricing and functionality of premium ultra-mobiles will help drive growth in 2018.

Moreover, emerging markets will drive the replacement cycle for mobile phones as smartphones in these markets are used as a main computing device and replaced more regularly than in mature markets.

The worldwide IT services market is forecast to grow 4.2 percent in 2017. Buyer investments in digital business, intelligent automation, and services optimization and innovation continue to drive growth.

Outlook for IT Spending Growth

"The range of spending growth from the high to low is much larger in 2017 than in past years. Normally, the economic environment causes some level of division, however, in 2017 this is compounded by the increased levels of uncertainty," said Mr. Lovelock.

For example, aggressive build-out of cloud computing platforms is pushing the global server forecast to reach 5.6 percent growth in 2017. This market projection was revised up 3 percent from last quarter's forecast and is sufficient growth to overcome the expected 3 percent decline in external controller-based storage and allow the data center systems segment to grow 2.6 percent in 2017.