Who is buying technology and what are they buying? Source: Shutterstock
Everyone is investing in technology but what are they buying?
COMPANIES need to transform themselves digitally. In order to do that, they need to invest in new technologies that can help upgrade their infrastructure.
Gartner believes businesses leaders understand that. It’s why the company’s analysts forecast that worldwide IT spending will reach US$3.79 trillion this year — a 1.1 percent increase over last year’s figure.
The important thing to note, however, is that upgrading the company’s DNA to become digital-first requires a mix of consulting, hardware, and software investments.
According to Gartner’s forecast, enterprise software and IT services will be the two of the fastest growing segments in the IT space this year.
Enterprise software spending is expected to touch US$427 billion, an increase over 7.1 percent over last year. In the next year, it is expected to grow even faster, growing at 8.2 percent to reach US$426 billion.
Spending on IT services on the other hand, are expected to touch US$1.02 trillion this year, a growth of 3.5 percent over last year’s figure. However, 2020 will see even more money poured into IT services, with total spending projected to reach $1.07 trillion.
On the other hand, data center systems see the largest contraction in spending this year. Spending is projected to fall to US$204 million this year compared to US$210 million last year.
It is expected to rise slightly next year to touch US$207, however, indicating that the market important yet fairly flat in terms of demand.
The exciting world of enterprise software
Overall, what’s most interesting is that spending on enterprise software is growing rapidly.
This includes business analytics and management tools such as ERP and CRM, intelligent software appliances that are built on artificial intelligence and machine learning, and smart industry solutions that combine cutting-edge technologies, among other things.
Given the fact that most companies already stored data and only need new solutions to democratize that data to create insights that aid product offerings and support the rejuvenation of the customer and employee experiences they offer.
“The choices CIOs make about technology investments are essential to the success of digital business. Disruptive emerging technologies, such as artificial intelligence (AI), will reshape business models as well as the economics of public- and private-sector enterprises, explained Gartner Research VP John-David Lovelock.
“AI is having a major effect on IT spending, although its role is often misunderstood. AI is not a product, it is really a set of techniques or a computer engineering discipline.
“As such, AI is being embedded in many existing products and services, as well as being central to new development efforts in every industry. Gartner’s AI business value forecast predicts that organizations will receive US$1.9 trillion worth of benefit from the use of AI this year alone.”
At the end of the day, Gartner’s insights only re-iterate what industry insiders have been seeing for a while now — a rapid growth in demand for intelligent business solutions that support the move to a more agile, digital-first unit.
Soumik Roy is a business and technology specialist. He helps small and medium enterprise owners understand what's most important to their company's growth and success.