IT Spending Grows 5.1% Gartner

Business IT spending should dispel concerns of a global economic recession, with growth predicted by Gartner

There won’t be any cuts to IT budgets next year, but actually healthy growth in enterprise IT spending, an analyst house has predicted.

Gartner reported that IT spending could potentially be recession proof, after provide that global IT spending will increase by 5.1% in 2023.

The prediction of good news stands in marked contrast to precautions taken by big tech companies. Last week, for example, Microsoft confirmed a second round of job cutswith less than 1,000 people reportedly receiving their P45s.

Spending Predictions

Gartner, however, predicted that global IT spending would total $4.6 trillion in 2023, a 5.1% increase from 2022.

Demand for IT in 2023 is expected to be strong as businesses forge ahead with digital business initiatives in response to economic turbulence.

“Enterprise IT spending is recession-proof as CEOs and CFOs, rather than cutting IT budgets, are increasing spending on digital business initiatives,” said Distinguished Analyst John-David Lovelock at Gartner.

“Economic turmoil will change the backdrop for technology investment, increasing spending in some areas and accelerating declines in others, but it is not expected to have a significant impact on the overall level of business technology spending,” Lovelock said. .

But Lovelock warned device makers such as Apple, which recently significantly hiked the prices of its iPhones and iPads outside its US home market, that consumer spending has been hammered by pressures. inflationary.

“However, inflation has reduced the purchasing power of consumers in almost every country in the world,” Lovelock warned. “Consumer purchasing power has been reduced to the point that many consumers are now deferring device purchases from 2022 to 2023, resulting in device spending falling 8.4% in 2022 and 0.6% in 2023.”

The technologies that are maintained versus those that run the business are evident by their projected growth rates in 2023, Gartner said.

He said spending in data center markets was sufficient to maintain existing on-premises data centers, but new spending continues to shift to cloud options, as evidenced by projected 11.3% growth. software spending in 2023.

Growth sectors

Gartner Forecasts Global IT Spending to Increase 3.4% for Data Center Systems; will increase by 11.3% for software; will decrease by 0.6% for appliances; will increase by 7.9% for IT services; and will increase by 2.4% for communications services.

In summary, Gartner predicts that overall IT spending will increase by 5.1% in 2023.

The analyst house said organizations will continue to protect efficiency-driven digital investments.

“In a shrinking or deteriorating economy, conventional wisdom calls for cutting costs, including IT costs,” Gartner said. “However, a July 2022 Gartner survey of more than 200 CFOs found that 69% planned to increase their spending on digital technologies, while the 2023 Gartner CIO and Technology Executive Survey found that CIOs are responsible for accelerating the time to value of digital investments. ”

“Businesses will use digital technology primarily to reshape their revenue stream, adding new products and services, changing the cash flow of existing products and services, as well as changing the value proposition of existing products and services” , Lovelock said.

“This trend has fueled a shift from buying technology to building, composing and assembling technology to meet specific business drivers,” Lovelock said. “This change is fundamental to the growth of on-premises cloud for new IT spending.”

“However, as organizations also seek to realize operations efficiencies, cost reductions and/or cost avoidance during the current economic uncertainty, more traditional back-office and operational needs of departments outside IT are added to the list of digital transformation projects,” Lovelock said. .

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