Will you spend more on IT next year?

Will you spend more on IT next year? Source: Shutterstock

Deconstructing the next year’s IT budget

WHILE digital transformation is a priority for every boardroom, not every company is investing in virtual reality, artificial intelligence, and 3D printing.

Instead, they’re focused on some of the more everyday solutions like the cloud and CRM that seem to deliver more bang for their buck and immediate results.

According to Gartner, worldwide IT spending is projected to total US$3.8 trillion in 2019, an increase of only 3.2 percent from expected spending of US$3.7 trillion in 2018.

However, enterprise software spending is forecast to experience the highest growth with an 8.3 percent increase in 2019. In fact, software as a service (SaaS) is driving growth in almost all software segments, particularly customer relationship management (CRM), due to an increased focus on providing better customer experiences.

Cloud software is also expected to grow at more than 22 percent this year compared with 6 percent growth for all other forms of software. While core applications such as ERP, CRM, and supply chain continue to get the lion share of dollars, security, and privacy are of particular interest right now.

Gartner says that 88 percent of recently surveyed global CIOs have deployed or plan to deploy cybersecurity software and other technology in the next 12 months.

In 2018, data center systems are expected to grow 6 percent, supported by a strong server market that saw spending growth of more than 10 percent over the last year, and in 2018 will come in at 5.7 percent growth.

However, by 2019 servers will shift back to a declining market and drop 1 percent to 3 percent every year for the next five years. This, in turn, will impact overall data center systems spending as growth slows to 1.6 percent in 2019.

IT services will be a key driver for IT spending in 2019 as the market is forecast to reach US$1 trillion in 2019, an increase of 4.7 percent from 2018.

An expected global slowdown in economic prosperity, paired with internal pressures to cut spending, is driving organizations to optimize enterprise external spend for business services such as consulting.

In a recent Gartner study, 46 percent of organizations indicated that IT services and supplier consolidation was in their top three most-effective cost-optimization approaches.

Worldwide spending on devices — PCs, tablets and mobile phones — is forecast to grow 2.4 percent in 2019, reaching $706 billion, up from US$689 billion in 2018.

Demand for PCs in the corporate sector has been strong, driven by Windows 10 PC hardware upgrades that should continue until 2020.

However, the PC market may see some impact from the Intel CPU shortage. While this shortage will have some short-term impacts, Gartner does not expect any lasting impact on overall PC demand.

The current expectation is that the shortage will continue into 2019, but Intel will prioritize the high-end CPU as well as the CPUs for business PCs. In the meantime, AMD will pick up the part of the market where Intel cannot supply CPUs.