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Monday, November 18, 2019

2019 Total Worldwide IT Spending will Reach $3.7 Trillion

Information Technology (IT) infrastructure investment can fluctuate based upon the annual shifts and changes in demand. Worldwide IT spending is forecast to total $3.7 trillion in 2019 -- that's an increase of just 0.4 percent over 2018, according to the latest worldwide market study by Gartner.

That said, this has been the lowest IT growth forecast in 2019. However, Gartner believes that global IT spending will likely rebound in 2020 with forecast growth of 3.7 percent, primarily due to enterprise software spending.

Information Technology Market Development

"The slowdown in IT spending in 2019 is not expected to stretch as far into 2020 despite concerns over a recession and companies cutting back on discretionary IT spending," said John-David Lovelock, research vice president at Gartner.

Today’s complex geopolitical environment has pushed regulatory compliance to the top of organizations’ priority list. Overall spending on security increased by 10.5 percent in 2019, with cloud security projected to grow 41.2 percent over the next five years.

"This is not just about keeping the ‘bad guys’ out," said Mr. Lovelock. "It is also about the expanding need to be compliant with tariffs and trade policy, intellectual property rights, and even with the multiple and sometimes overlapping privacy laws."

Despite the ongoing tariff war, U.S. IT spending is forecast to grow 3.5 percent in 2019, but IT spending in China is expected to grow only 0.1 percent. Tariffs have not had an effect on IT spending.

But if tariffs extend to devices like PCs and mobile phones, then we will likely see manufacturers switch supply routes to minimize costs and have their technology made outside of China.

The device market will see the sharpest spending decline among all segments in 2019, down 5.3 percent from $713 billion in 2018. However, the market is expected to see a modest growth of 1.2 percent in 2020.

"Similar to how consumers have reached a threshold for upgrading to new technology and applications, technology general managers and product managers should invest only in the next generation of products that will push them closer to becoming a true technology company," said Mr.Lovelock.

IT spending growth is being driven by the rest of the world catching up on cloud spending. The U.S. is leading cloud services adoption and accounts for over half of global spending on cloud computing.

In some cases, countries that Gartner tracks lag one to seven years in cloud adoption rates. For perspective, the country directly behind the U.S. on cloud spending is the United Kingdom, which only spends 8 percent on public cloud services.

An interesting outlier is China, which has the highest growth of cloud spending out of all countries. While China is closing the spending gap, it still will not reach U.S. levels by 2023.

Outlook for Worldwide IT Spending Growth

Gartner predicts that organizations with a high percentage of IT spending dedicated to the cloud will become the recognized digital leaders in the future. "Most companies are caught trying to either cut costs or invest for growth, but the top-performing enterprises are doing both,"  said Mr. Lovelock.

A challenge facing many leaders across industries is learning how an established organization can operate as both a traditional company and an emerging digital business at the same time. According to the Gartner assessment, this ongoing scenario will likely drive future IT spending on new products and services.