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Enterprise software spending to grow faster than general IT spending in 2019 – Gartner

11th July 2019 BY: Schalk Burger
Creamer Media Senior Contributing Editor

While global spend on information technology (IT) is projected to grow by only about 0.6% to $3.74-trillion this year, the enterprise software market will growth by an estimated 9% to $457-billion, IT market research and consulting multinational Gartner research VP John-David Lovelock said this week.

“CIOs are continuing to rebalance their technology portfolios, shifting investments from on-premises to off-premises capabilities," he said.

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As cloud becomes increasingly mainstream over the next few years, it will influence ever-greater portions of enterprise IT decisions, in particular system infrastructure.

Prior to 2018, most of the cloud opportunity had been in application software and business process outsourcing, Lovelock added.

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This year, it is predicted to expand to cover additional application software segments, including office suites, content services and collaboration services.

“Spending in old technology segments, like data centres, will only continue to drop,” he emphasised.

Meanwhile, consumer spending worldwide as a percentage of total spend is dropping every year in every region owing to saturation and commoditisation, especially with personal computers, laptops and tablet devices.

“Cloud applications allow these devices to have an extended life, with less powerful equipment needed to run new software. The devices market will experience the strongest decline, down 4.3% to $682-billion this year.

“There are hardly any new buyers in the devices market, meaning that the market is now being driven by replacements and upgrades. Add in extended lifetimes along with the introduction of smart home technologies and Internet of Things, and consumer technology spending will continue to drop,” said Lovelock.

Despite uncertainty, Gartner expects IT spending to remain flat this year. General IT spending is down 1.1% from the previous quarter’s forecasted growth.

An economic downturn is not a likely scenario for either this year or next; however, the risk is currently sufficient to warrant preparation and planning, he averred.

Technology general managers and product managers should plan out product mix and operational models that will optimally position product portfolios in a downturn should one occur, said Lovelock.

“While there is great variation in growth rates at country level, virtually all countries tracked by Gartner will see growth in 2019. Despite the ongoing tariff war, North American IT spending is forecast to grow 3.7% and IT spending in China is expected to grow 2.8%,” he said. 

EDITED BY: Creamer Media Reporter
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