Dive Brief:
- Gartner dialed back its global IT spending forecast for the year Wednesday, citing CIO change fatigue as a contributing factor.
- The analyst firm trimmed roughly $100 billion from its prior forecast but still expects tech spending to crest at $5 trillion for the first time in 2024, marking a 6.8% increase over 2023’s $4.7 trillion, the report said.
- The change fatigue first diagnosed by Gartner in October could metastasize into change resistance this year, the report said, as CIOs contend with the ongoing proliferation of LLM-based tools and generative AI add-ons to existing product suites.
Dive Insight:
Enterprises trimmed budgets last year, hedging against macroeconomic uncertainty and depressing IT spending growth to a rate of just 3.3%, a smidge higher than 2022’s growth rate.
Weariness played a part, too, according to the report, with CIOs exhibiting lower levels of risk tolerance and demanding greater certainty of technology projects, the report said.
While executives may be resistant to signing new contracts, committing to long-term initiatives and partnering with additional vendors, enterprise modernization marches forward. Of the $12.2 billion Citigroup invested in technology last year, more than half went toward “change-the-bank” initiatives.
“Enterprises continue to find more uses for technology,” John-David Lovelock, distinguished VP analyst at Gartner, said in the report. “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.”
As organizations continue to prioritize efficiency gains and optimization projects, investments in IT services will drive overall spending growth, according to Gartner. The category will represent the largest segment of IT spend for the first time by the end of the year, accounting for $1.5 trillion.
The software category, which saw a sharp decline in spending growth last year, will recover, Gartner expects, increasing by 4.6%.
Generative AI, however, won’t have a major impact on IT spending, Lovelock said.
“2024 will be the year when organizations actually invest in planning for how to use GenAI,” said Lovelock. “IT spending will be driven by more traditional forces, such as profitability, labor, and dragged down by a continued wave of change fatigue.”
