Technology | Media | Telecommunications

Tuesday, July 18, 2017

Next-Gen Digital Business Growth Fuels IT Investments

Digital transformation projects drive requirements for new business technology investment. Worldwide IT spending is projected to total $3.5 trillion in 2017 -- that's a 2.4 percent increase from 2016, according to the latest market study by Gartner. That growth is up from the previous quarter's forecast of 1.4 percent.

"Digital business is having a profound effect on the way business is done and how it is supported," said John-David Lovelock, vice president at Gartner. "The impact of digital business is giving rise to new categories; for example, the convergence of software plus services plus intellectual property.

Digital Business Market Development

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 smart machines in retail.

According to the Gartner assessment, the focus is on how technology is disrupting and enabling business growth momentum. CEOs and others in the C-suite continue to influence the strategy.

The worldwide enterprise software market is forecast to grow 7.6 percent in 2017 -- that's up from 5.3 percent growth in 2016. As software apps allow more organizations to derive revenue from digital business channels, there will be a stronger need to automate and release new functionality.

"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," said Mr. Lovelock. "These cloud-based tools allow infrastructure and operations (I&O) organizations to more rapidly add functionality and adopt newer technologies to help them manage faster application release cycles."

According to Gartner, 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.

How Convergence Drives Vendor Revenues

IT spending increased in 2016, but only two of the top ten IT vendors posted organic revenue growth. With revenue sources still tied to the convergence of social, mobility, cloud and information, some vendors will fare better in 2017 due to strength in mobile phone sales.

Worldwide spending on devices is projected to grow 3.8 percent in 2017, to reach $654 billion. This is up from the previous quarter's forecast of 1.7 percent. Mobile phone growth will be driven by increased average selling prices for premium phones in mature markets.

However, the troubled media tablet market continues to decline, as replacement cycles remain extended.