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Monday, May 03, 2021

Business Technology Investment will Reach $4.1 Trillion

Enterprise CIOs crave practical insights and guidance to help them drive digital business transformation projects. They've been tasked to develop comprehensive IT investment strategies across hardware, software, professional services, and telecom networks. That, in turn, drives IT vendor revenue growth.

Worldwide IT spending is projected to total $4.1 trillion in 2021 -- that's an increase of 8.4 percent from 2020, according to the latest worldwide market study by Gartner.

The source of funds for new digital business initiatives will more frequently come from groups outside the traditional IT organization and charged as a cost of revenue, or cost of goods sold.

Business Technology Market Development

Gartner’s IT spending forecast methodology relies heavily on the analysis of vendors across the entire range of IT products and services. They use primary research, complemented by secondary research sources, to build a database of market size data on which to base their forecast.

"IT no longer just supports corporate operations as it traditionally has, but is fully participating in business value delivery," said John-David Lovelock, vice president at Gartner.

Not only does this shift IT from a 'back-office' role to the 'front of the business', but it also changes the source of funding from an overhead expense that is maintained, monitored and sometimes cut, to the key thing that drives digital growth.

All IT spending segments are forecast to have positive growth through 2022. The highest growth will come from devices (14 percent) and enterprise software (10.8 percent) as organizations shift their focus to providing a more comfortable, innovative and productive environment for their hybrid workforce.

As one example, the increased focus on the employee experience and well-being are propelling technology investments forward in areas such as social software and collaboration platforms and human capital management (HCM) software.

Although optimization and cost savings efforts won’t disappear simply because there’s more economic certainty in 2021, the focus for CIOs through the remainder of the year will be completing the digital business plans that are aimed at enhancing, extending and transforming the company’s value proposition.

"Last year, IT spending took the form of a 'knee jerk' reaction to enable a remote workforce in a matter of weeks. As hybrid work takes hold, CIOs will focus on spending that enables innovation, not just task completion," said Mr. Lovelock.

That said, according to the Gartner assessment, recovery across countries, vertical industries and IT segments still varies significantly, prompting an uneven K-shape economic recovery.

Outlook for Digital Business Transformation Growth

As an example, from an industry perspective, banking, securities, and insurance spending will closely resemble pre-pandemic levels as early as 2021, while retail and transportation sector spending won’t see a similar recovery until closer to 2023.

Regionally, Gartner predicts that Latin America is expected to recover in 2024, while Greater China has already surpassed 2019 IT spending levels. Moreover, North America and Western Europe are both expected to recover in late 2021.

Beyond the anticipated industry and regional IT investment differences, forward-thinking CIOs and CTOs will likely use the disruption presented by the global COVID-19 pandemic to accelerate past their less progressive peer group in other organizations.

So, across the globe, there will very likely be market winners and losers, as a result of the IT investment disparities. That's the outcome of a K-shaped economic recovery.