Friday, January 19, 2018

Why Worldwide IT Spending will Reach $3.7 Trillion

Across the globe, more CIOs and CTOs are planning significant IT infrastructure investments, as part of their organization's digital transformation growth agenda. Worldwide IT spending is projected to total $3.7 trillion in 2018 -- that's an increase of 4.5 percent from 2017, according to the latest forecast by Gartner.

"Global IT spending growth began to turn around in 2017, with continued growth expected over the next few years," said John-David Lovelock, research vice president at Gartner. "Projects in digital business, blockchain, Internet of Things (IoT), and progression from big data to algorithms to machine learning to artificial intelligence (AI) will continue to be main drivers of growth."

Enterprise IT Market Development

Enterprise software continues to exhibit strong growth, with worldwide software spending projected to grow 9.5 percent in 2018, and it will grow another 8.4 percent in 2019 to total $421 billion.

Organizations are expected to increase spending on enterprise application software in 2018, with more of the budget shifting to software as a service (SaaS). The growing availability of SaaS-based solutions is encouraging new adoption and spending across many subcategories, such as financial management systems (FMS), human capital management (HCM) and analytic applications.

The devices segment is expected to grow 5.6 percent in 2018. In 2017, the devices segment experienced growth for the first time in two years with an increase of 5.7 percent. End-user spending on mobile phones is expected to increase marginally as average selling prices continue to creep upward even as unit sales are forecast to be lower.

PC growth is expected to be flat in 2018 even as continued Windows 10 migration is expected to drive positive growth in the business market in China, Latin America and Eastern Europe. That said, the impact of the Apple iPhone 8 and iPhone X was minimal in 2017.

However, according to the Gartner assessment, Apple iOS shipments are expected to grow 9.1 percent in 2018.

"Looking at some of the key areas driving spending over the next few years, Gartner forecasts $2.9 trillion in new business value opportunities attributable to AI by 2021, as well as the ability to recover 6.2 billion hours of worker productivity," said Mr. Lovelock.

Outlook for Artificial Intelligence Adoption

That business value is attributable to using AI to, for example, drive efficiency gains, create insights that personalize the customer experience, entice engagement and commerce, and aid in expanding revenue-generating opportunities as part of new business models driven by the insights from data.

Capturing the potential business transformation value will require investment. Spending on artificial intelligence apps for customer experience and revenue generation will be a force multiplier -- the cost to implement will be exceeded by the positive network effects and resulting increase in revenue.