- Worldwide IT spending is expected to reach $3.5 trillion this year, a 7.3% drop from 2019, according to a Gartner forecast released Monday. It represents a slight increase over May's projection of an 8% drop in spending.
- Dipping across all segments, the device category is the hardest hit and expected to drop 16.1% this year, though it got a small boost during the shift to remote work. Gartner projects the segment will have the smallest growth in 2021, still failing to reach 2019 spending.
- Through it all, infrastructure as a service shines, with Gartner projecting 13.4% growth, reaching $50.4 billion this year and $64.3 billion in 2021. With changed revenue streams and operating at less capacity, companies have to become more digital than planned, more quickly and with less money, John-David Lovelock, distinguished research vice president at Gartner, told CIO Dive. "What that usually means for the CIO is more cloud."
Businesses are determining how to operate in a pandemic, armed with data about cash flow and projections to augment business plans. Uncertainty abounds as technology leaders determine where they need to spend.
Cloud has remained a proof point and there is the continued push to reduce the number of physical technology assets an organization owns.
What's next for spending is up in the air. After months of budget freezes, constraints are loosening as businesses get a better idea of cash flow. It's made way for revamped technology priorities for the year.
The pandemic and ensuing recovering have four phases, Lovelock said:
Phase 1: Reaction, where everything froze.
Phase 2: An understanding of what's normal for the time being
Phase 3: Expectations of a return to growth
Phase 4: Actual growth
The industry is in the heart of phase 2, and phase 3 timing is uncertain at best. As states have reopened, COVID-19 infection rates have spiked, which could further disrupt business plans.
Phase 3 will vary by industry, Lovelock said. Business will spend and look for areas of opportunity going beyond cost optimization and determining what their organization can bring to market.
Vendor flexibility is paramount. Software as a service companies are offering incentives to learn new customers, offering free trials to lure service adoption, Lovelock said. If it picks up, that takes a lot of revenue out of this year.
Breeding goodwill is important for a return to growth. "Goodwill is possibly the most important thing to engender in the pandemic," Lovelock said. With cash constrained technology units, vendors need to focus on "farming not hunting."
"This is the year of the current client," he said.