CEOs continue to invest in digital business technologies to stay ahead of their competition, enter additional markets, unlock new revenue streams, and streamline commercial operations.
Worldwide information technology (IT) spending is forecast to reach $5 trillion in 2024 -- that's an increase of 6.8 percent from 2023, according to the latest global market study by Gartner.
This estimate is down from the previous quarter’s forecast of 8 percent growth. While Generative AI (GenAI) had significant hype in 2023, it may not significantly change the growth of IT spending.
Enterprise IT Market Development
"While GenAI will change everything, it won’t impact IT spending significantly, similar to IoT, blockchain and other big trends we have experienced," said John-David Lovelock, vice president analyst at Gartner.
Moreover, 2024 will be the year when organizations actually invest in planning for how to use GenAI. However, enterprise IT spending may be driven by more traditional forces, such as profitability, and labor requirements.
Managed IT services will continue to see an increase in growth in 2024, becoming the largest segment of enterprise IT spending for the first time.
Spending on IT services is expected to grow 8.7 percent in 2024, reaching $1.5 trillion. This is largely due to enterprises investing in organizational efficiency and workflow optimization projects.
These investments will be crucial during this period of economic uncertainty.
Enterprises continue to find more uses for business technology -- IT has moved out of the back office, through the front office and is now revenue-producing, until there is a plateau for how and where technology can be used in an enterprise, there cannot be a plateau in enterprise IT spending.
The overall enterprise IT spending growth rate for 2023 was 3.3 percent -- that's only a 0.3 percent increase from 2022. This was largely due to what Gartner calls "change fatigue" among CIOs.
Momentum will be regained in 2024, according to the Gartner assessment.
Even with the expected regained momentum in 2024, the broader IT spending environment remains slightly constrained by change fatigue. That could manifest as change resistance -- with CIOs hesitating to sign new contracts, commit to long-term initiatives, or take on new technology partners.
Outlook for Enterprise IT Applications Growth
Gartner analysts anticipate that for new initiatives or projects to get funded and launched, the C-suite will require higher levels of risk mitigation and greater certainty of desired business outcomes. It's creating a significant go-to-market challenge for IT vendors.
That said, I believe IT vendors must help to support CIO business case development. Why? Their outdated product-centered approach fails to influence senior executives who demand tangible results.
To gain trust and secure deals, IT vendors need to move beyond technical specs and tailor value creation propositions to each C-suite's strategic goals. Quantifying ROI, translating tech jargon to business language, and offering flexible deployment models is key to aligning with customer CEO demands.