Analysts to Discuss Latest IT Spending Outlook During Gartner
Webinar on April 12
Worldwide IT spending is forecast to total $3.49 trillion in 2016, a
decline of 0.5 percent over 2015 spending of $3.5 trillion, according to
Gartner, Inc. (see Table 1). This is down from last quarter's forecast
of 0.5 percent growth. The change in the forecast is mainly due to
currency fluctuations.
"There is an undercurrent of economic uncertainty that is driving
organizations to tighten their belts, and IT spending is one of the
casualties," said John-David
Lovelock, research vice president at Gartner. "Concurrently, the
need to invest in IT to support digital
business is more urgent than ever. Business leaders know that they
need to become digital businesses or face irrelevance in a digital
world. To make that happen, leaders are engaging in tough cost
optimization efforts in some areas to fund digital business in
others."
"As an example, the savings from legacy system optimization and
enhancements are being redirected to fund digital initiatives. It's
about doing more with the same funds," said Mr. Lovelock. "Typically,
less than 10 percent of organizations are in cost optimization or cost
cutting mode. However, the need to spend on digital business initiatives
in a time when revenue growth does not support runaway IT budgets is
forcing more organizations to optimize as a first step. Business
processes, as well as IT, are undergoing optimization — digital business
requires both. However, many CIOs are reluctant to raise this
possibility, given the cultural and political barriers to optimizing
business costs."
The most evident results of these optimization efforts are in the
switches in spending between assets and services. "Most traditional IT
now has a 'digital service twin' — license software has cloud software,
servers have Infrastructure as a Service, and cellular voice has VoLTE,"
Mr. Lovelock said. "Things that once had to be purchased as an asset can
now be delivered as a service. Most digital service twin offerings
change the spending pattern from a large upfront payment to a smaller
reoccurring monthly amount. This means that the same level of activity
has a very different annual spend."
The Gartner Worldwide IT Spending Forecast is the leading indicator of
major technology trends across the hardware, software, IT services and
telecom markets. For more than a decade, global IT and business
executives have been using these highly anticipated quarterly reports to
recognize market opportunities and challenges, and base their critical
business decisions on proven methodologies rather than guesswork.
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Table 1. Worldwide IT Spending Forecast (Billions of U.S.
Dollars)
|
|
|
|
|
2015 Spending
|
|
|
|
2015 Growth (%)
|
|
|
|
2016 Spending
|
|
|
|
2016 Growth (%)
|
Devices
|
|
|
|
650
|
|
|
|
-6.4
|
|
|
|
626
|
|
|
|
-3.7
|
Data Center Systems
|
|
|
|
171
|
|
|
|
2.9
|
|
|
|
175
|
|
|
|
2.1
|
Software
|
|
|
|
308
|
|
|
|
-1.9
|
|
|
|
321
|
|
|
|
4.2
|
IT Services
|
|
|
|
910
|
|
|
|
-4.7
|
|
|
|
929
|
|
|
|
2.1
|
Communications Services
|
|
|
|
1,470
|
|
|
|
-8.4
|
|
|
|
1,441
|
|
|
|
-2.0
|
Overall IT
|
|
|
|
3,509
|
|
|
|
-6.0
|
|
|
|
3,492
|
|
|
|
-0.5
|
Source: Gartner (April 2016)
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The device market (PCs, ultramobiles, mobile phones, tablets and
printers) is forecast to decline 3.7 percent in 2016. The smartphone
market is approaching global saturation, slowing growth. The PC and
ultramobile markets are expected to decline. The underlying reasons are
a combination of factors and are geography-specific, and the worsening
economic conditions in many countries only serve to amplify the impact
of these factors.
Data center systems' spending is projected to reach $175 billion in
2016, a 2.1 percent increase from 2015. This top-level relative
stability masks some changes within the segments; enterprise network
equipment had a stronger-than-anticipated 2015 as a result of network
upgrades, and this is expected to carry on into 2016. The
external-controller-based storage segment continues to suffer from
ongoing challenges. In the server segment, demand from hyperscale buyers
is expected to reduce in 2016, particularly in regions that are
suffering from economic challenges, such as Eurasia. The mainframe
refresh, which benefited the market in 2015, is expected to abate in
2016, also inhibiting the overall growth figures.
Global enterprise software spending is on pace to total $321 billion, a
4.2 percent increase from 2015. The operating system forecast has been
downgraded, reflecting Gartner's expectation for further delays in the
adoption of Windows 10 and Windows Server 2016. However, it is the key
emerging markets, particularly Latin America, which face escalating
political and economic challenges that are responsible for the slow
growth. Organizations in those regions must balance cost cutting with
growth opportunities during times of economic concern.
Spending in the IT services market is expected to return to growth in
2016, totaling $929 billion, up 2.1 percent from 2015. A stronger
outlook for Japan and India is nearly balanced by a weaker outlook in
Brazil, China and South Korea, based on challenging economic and
political conditions in Brazil; and government actions and weakening
economic conditions in China and South Korea.
Telecom service spending is projected to decline 2.0 percent in 2016,
with spending reaching $1.4 trillion. Continuing economic downturns in
major markets such as Russia and Brazil are dampening spending in both
fixed and mobile voice, and a slight slowdown in China's growth is
affecting consumer confidence and eroding spend in fixed voice services.
In enterprise services, conditions in these same three major markets are
leading to consolidation among businesses (reducing connections and
spend), however, mobile data spending is a bright spot with accelerating
growth driven by improved pricing on bandwidth, mobile app and 4G/LTE
network availability.
More-detailed analysis on the outlook for the IT industry will be
presented in the complimentary webinar “IT
Spending Forecast, 1Q16 Update: Where Is All the Money Going?”
taking place April 12 at 11 a.m. EDT. During the webinar, Gartner
analysts will discuss global IT spending from 2016 through 2019 and why
the pace of IT spending is not keeping up with the pace of change.
Gartner's IT spending forecast methodology relies heavily on rigorous
analysis of sales by thousands of vendors across the entire range of IT
products and services. Gartner uses primary research techniques,
complemented by secondary research sources, to build a comprehensive
database of market size data on which to base its forecast.
The Gartner quarterly IT spending forecast delivers a unique perspective
on IT spending across hardware, software, IT services and
telecommunications segments. These reports help Gartner clients
understand market opportunities and challenges. The most recent IT
spending forecast research is available at http://www.gartner.com/technology/research/it-spending-forecast/.
This Quarterly IT Spending Forecast page includes links to the latest IT
spending reports, webinars, blog posts and press releases.
About Gartner
Gartner, Inc. (NYSE: IT) is the world's leading information technology
research and advisory company. The company delivers the
technology-related insight necessary for its clients to make the right
decisions, every day. From CIOs and senior IT leaders in corporations
and government agencies, to business leaders in high-tech and telecom
enterprises and professional services firms, to technology investors,
Gartner is the valuable partner to clients in approximately 10,000
distinct enterprises worldwide. Through the resources of Gartner
Research, Gartner Executive Programs, Gartner Consulting and Gartner
Events, Gartner works with every client to research, analyze and
interpret the business of IT within the context of their individual
role. Founded in 1979, Gartner is headquartered in Stamford,
Connecticut, USA, and has 7,900 associates, including more than 1,700
research analysts and consultants, and clients in more than 90
countries. For more information, visit www.gartner.com.
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