Do more, with the same or less budget, was a common information technology (IT) leadership theme last year. The more courageous and resourceful CIOs attempted to fulfill the demands from their line of business leader's expansive digital transformation agenda in 2016. Across all industries, IT procurement had evolved.
Exasperated by high expectations and limited resources, some CIOs chose to retire, a few simply resigned and numerous others were told their services were no longer required. Many of those CIOs that stayed had their responsibilities split with a new CTO or CDO executive. Meanwhile, IT vendors had to navigate this increasingly diverse buyer landscape.
IT Product & Service Market Development
Worldwide vendor revenues for IT products and services are forecast to reach nearly $2.4 trillion in 2017 -- that's an increase of about 3.5 percent over 2016. International Data Corporation (IDC) estimates that global IT spending will grow to nearly $2.65 trillion in 2020 -- at an compound annual growth rate (CAGR) of 3.3 percent during the forecast period.
Industry spending on IT products and services will continue to be led by financial services and manufacturing. Together, they will generate around 30 percent of all IT revenues, as they invest in technology to advance their digital business transformation efforts.
The telecommunications and professional services industries and the central government are also among the largest buyer groups. But the industries with the fastest spending growth are professional services, healthcare, and banking.
"Strong pockets of growth have emerged, such as investments by financial services firms and utilities in data analytics software, or IT services spending by telcos and banks. These industry-driven opportunities for IT vendors will continue to emerge, even as the global economy remains volatile," said Stephen Minton, vice president at IDC.
North America will be the largest market for IT products and services, generating more than 40 percent of all revenues throughout the forecast period. Western Europe will account for about 20 percent of worldwide IT revenues followed by Asia-Pacific (excluding Japan) at slightly less than 20 percent.
The fastest growing regions will be Latin America (5.3 percent CAGR) followed by Asia-Pacific (excluding Japan) and the United States (each with a 4.0 percent CAGR).
Outlook for IT Product & Service Spending
While IT services will be the largest category of spending in 2017 ($275 billion), software purchases will experience strong growth (7.9 percent CAGR) making it the largest category by 2020.
Business related services will also experience healthy growth over the forecast period (6.0 percent CAGR). However, once again, traditional IT hardware purchases will be nearly flat (0.5 percent CAGR).
More than 45 percent of all IT spending worldwide will come from very large businesses (more than 1,000 employees) while the small office category (businesses with 1-9 employees) will provide roughly one quarter of all IT spending throughout the forecast period.
Spending growth will be evenly spread with the medium (100-499 employees), large (500-999 employees) and very large business categories -- each segment experiencing a CAGR of 4.3 percent.