Gartner forecasts that worldwide IT spending will reach US$3.77 trillion (A$5.20 trillion) in 2019, and A$5.33 trillion in 2020. However, a close look at the numbers suggests a forecast that is not actually that pretty.
The analyst firm estimated that overall IT spending grew by 3.9 percent in 2018 over 2017 to reach A$5.04 trillion. However, the growth rate for 2019 over 2018 is forecast to fall to 3.2 percent, while growth for 2020 over 2019 is forecast to fall even more, to 2.8 percent.
The result? Growth in total spending, but at a slower rate.
Why the slowdown?
There are several factors impacting the slowdown in IT spending growth.
John-David Lovelock, research vice president at Gartner, said in a statement that 2019 IT spending will see growth despite uncertainty from recession rumorus, Brexit, and trade wars and tariffs.
"However, there are a lot of dynamic changes happening in regards to which segments will be driving growth in the future. Spending is moving from saturated segments such as mobile phones, PCs and on-premises data centre infrastructure to cloud services and Internet of Things (IoT) devices. IoT devices, in particular, are starting to pick up the slack from devices. Where the devices segment is saturated, IoT is not," Lovelock said.
Data centre systems spending: growth this year, but spending drops in 2020
Data centre systems spending enjoyed strong growth of 11.3 percent in 2018 over 2017, making it the fastest-growing part of overall IT spending last year. On the other hand, it was the smallest part, with revenue reaching only A$278.7 billion.
However, data centre systems spending will only grow 4.2 percent in 2019. And in 2020, spending in this category is actually slated to drop by 3.9 percent, making it the only component of IT spending to show negative growth, Gartner said.
Enterprise software spending growth slows, but still above the rest
Enterprise software spending reached A$547.54 billion in 2018, which Gartner estimated was up 9.3 percent over that of 2017. Gartner also forecasts that spending in this category will slow slightly to 8.5 percent in 2019 and 8.2 percent in 2020. Even so, that makes enterprise software spending the fastest-growing component of worldwide IT spending.
Gartner said that the shift to cloud will drive continued strong spending on enterprise software. Businesses in 2019 are expected to increase enterprise application software spending in 2019, and shift a larger portion of their budgets to software-as-a-service, the analyst firm said.
Device spending growth to increase
Spending on devices, which rose only 0.5 percent to reach A$923 billion in 2018, is slated to see much better growth going forward. Gartner forecasts that 2019 spending on devices will increase by 1.6 percent over 2018, and will grow 1.4 percent in 2020 over 2019.
The spending on devices will be going through a transformation over the next couple years, Gartner said. with sales in the largest, most highly saturated mobile device market including China, the US, and Western Europe being driven by replacement cycles. Meanwhile, Apple's increasing smart phone prices are pushing more consumers to keep their current devices, and Samsung faces challenges differentiating his premium devices, the analyst firm said.
Services spending still tops, growth decline moderate
Global IT spending on services is by far the largest part of overall global IT spending, Gartner said.
2018 spending on communications services rose 1.9 percent to reach A$1.93 trillion, making it the largest component of overall spending by far. However, growth in this area is slated to drop to 1.3 percent in 2019 over 2018 before increasing to 1.5 percent in 2020 over 2019.
Spending on IT services, which is the second-largest component of global IT spending, rose 5.6 percent in 2018 to A$1.36 trillion. While spending on IT services in the next two year will fall slightly, Gartner still forecasts this to be a fast-growing part of IT spending, with spending expected to rise 4.7 percent in 2019 and 4.8 percent in 2020.