Global IT spending to grow 3.2% in 2019

In a recent report, Gartner stated that there will be a sharp increase in the adoption of cloud. Worldwide IT spending is projected to be a total of $3.8 trillion in 2019, an increase of 3.2 percent from expected spending of $3.7 trillion in 2018, said John-David Lovelock, research vice president at Gartner.

The report further says that there will be more enterprise use of cloud services - instead of buying their own servers, customers would be turning to the cloud. As enterprises continue their digital transformation efforts, shifting to ‘pay for use’ will continue. This sets enterprises up to deal with the sustained and rapid change that underscores digital business.

Enterprise software spending is forecasted to experience the highest growth with an 8.3 percent increase in 2019 (see Table 1). Software as a service (SaaS) is driving growth in almost all software segments, particularly customer relationship management (CRM), due to increased focus on providing better customer experiences. Cloud software will grow at more than 22 percent this year compared with 6 percent growth for all other forms of software. While core applications such as ERP, CRM and supply chain continue to get the lion share of dollars, security and privacy are of particular interest right now. Eighty-eight percent of recently surveyed global CIOs have deployed or planned to deploy cybersecurity software and other technologies in the next 12 months.

Table 1. Worldwide IT Spending Forecast (Billions of U.S. Dollars)

Source: Gartner (October 2018)

In 2018, datacenter systems are expected to grow 6 percent, buoyed by a strong server market that saw spending growth of more than 10 percent over the last year, and in 2018 will come in at 5.7 percent growth. However, by 2019 servers will shift back to be a declining market and drop 1 percent to 3 percent every year for the next five years. This, in turn will impact overall datacenter systems spending as growth slows to 1.6 percent in 2019.

IT services will be a key driver for IT spending in 2019 as the market is forecasted to reach $1 trillion in 2019, an increase of 4.7 percent from 2018. An expected global slowdown in economic prosperity, paired with internal pressures to cut spending, is driving organizations to optimize enterprises' external spend for business services such as consulting. In a recent Gartner study, 46 percent of organizations indicated that IT services and supplier consolidation was in their top three most-effective cost-optimization approaches.

Worldwide spending for devices - PCs, tablets and mobile phones - is forecasted to grow 2.4 percent in 2019, reaching $706 billion, up from $689 billion in 2018. Demand for PCs in the corporate sector has been strong, driven by Windows 10 PC hardware upgrades that should continue until 2020. However, the PC market may see some impact from the Intel CPU shortage. While this shortage will have some short-term impacts, Gartner does not expect any lasting impact on overall PC demand. The current expectations is that the shortage will continue into 2019, but Intel will prioritize the high-end CPU as well as the CPUs for business PCs. In the meantime, AMD will pick up the part of the market where Intel cannot supply CPUs.

“PCs, laptops and tablets have reached a new equilibrium state. These markets currently have stable demand from consumers and enterprises. Vendors have only subtle technology differentiation, which is pushing them to offer PC as a Service (PCaaS) in order to lock clients into multiyear recurring revenue streams and offer new bundles service options,” said Lovelock. 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.