Australia software spending to surge as data centre declines: Gartner

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Australia software spending to surge as data centre declines: Gartner

Gartner expects Australian IT spending to reach $86.4 billion in 2019, an increase of 2.46 percent over its forecast for total end-user spending in 2018.

Software will continue to be the strongest sector, with another year of double-digit growth predicted.

Gartner expects software spending to grow 11.51 percent to $12.7 billion in 2018 then another 11.8 percent to hit $14.2 billion the following year.

IT services will remain the largest sector of the market, worth $30.4 billion in 2018 and growing 2.03 percent to reach $31.1 billion in 2019. 

Gartner sees a turnaround in spending on IT services, which were expected to fall nearly 2 percent from 2016 to 2017 but will grow by roughly 2 percent in 2018 and again in 2019.

Communication services are the second-largest sector but growing slower. Gartner foresees communications spending rising by just 0.3 percent in 2018 to hit $26.6 billion then growing by another 1.13 percent to reach $26.9 billion in 2019.

Spending on data centre systems will see the biggest decline, according to Gartner. Data centre systems are expected to fall 1.94 percent in 2018 then a further 5.29 percent in 2019, down to $2.5 billion.

Table: Australian IT Spending Forecast (millions of AUD)​

  2,017 Growth 2,018 Growth 2,019 Growth
Devices 11,774 -1.44 11,946 1.46 11,744 -1.69
Data Centre Systems 2,739 1.97 2,686 -1.94 2,544 -5.29
Software 11,356 -10.32 12,663 11.51 14,164 11.85
IT Services 29,884 -1.84 30,445 1.88 31,064 2.03
Communications Services 26,542 -0.29 26,620 0.29 26,920 1.13
Total Sum of End-User Spending 82,295 -2.45 84,360 2.51 86,437 2.46

Source: Gartner (January 2018)

Worldwide comparisons

After growing slower than the worldwide rate in 2018, Australia's growth in IT spending will be roughly on par with the worldwide rate in 2019.

Data centre services will decline much faster in Australia than worldwide and IT services will grow less quickly, however, Australian software spending will outstrip the global rate.

Gartner expects worldwide IT spending to total US$3.7 trillion in 2018, an increase of 4.5 percent from 2017.

"Global IT spending growth began to turn around in 2017, with continued growth expected over the next few years. However, uncertainty looms as organisations consider the potential impacts of Brexit, currency fluctuations, and a possible global recession," said John-David Lovelock, research vice president at Gartner.

"Despite this uncertainty, businesses will continue to invest in IT as they anticipate revenue growth, but their spending patterns will shift. Projects in digital business, blockchain, Internet of Things (IoT), and progression from big data to algorithms to machine learning to artificial intelligence (AI) will continue to be main drivers of growth."

Table: Worldwide IT Spending Forecast (billions of US Dollars)

  2,017 Growth 2,018 Growth 2,019 Growth
Devices 667 5.7 704 5.6 710 0.9
Data Center Systems 178 4.4 179 0.6 179 -0.2
Enterprise Software 355 8.9 389 9.5 421 8.4
IT Services 933 4.3 985 5.5 1,030 4.6
Communications Services 1,393 1.3 1,427 2.4 1,443 1.1
Overall IT 3,527 3.8 3,683 4.5 3,784 2.7
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