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Gartner: A/NZ IT spending continues to outstrip global average

12 Jul 2019
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Worldwide spending on information technology products and services is projected to total US$3.74 trillion in 2019, an increase of 0.6% from 2018, according to the latest forecast by Gartner. 

This is slightly down from the previous quarter’s forecast of 1.1% growth.

 

Source: Gartner (July 2019)

 

2018 Spending

2018 Growth (%)

2019 Spending

2019 Growth (%)

2020 Spending

2020 Growth (%)

Data Centre Systems

210

15.7

203

-3.5

208

2.8

Enterprise Software

419

13.5

457

9.0

507

10.9

Devices

712

5.9

682

-4.3

688

0.8

IT Services

993

6.7

1,031

3.8

1,088

5.5

Communications Services

1,380

-0.1

1,365

-1.0

1,386

1.5

Overall IT

3,716

5.1

3,740

0.6

3,878

3.7

Source: Gartner (July 2019)

In Australia, spending on technology products and services is expected to reach almost A$93.8 billion in 2019, a 3.1% increase from last year, and reach $107 billion in 2022.

Source: Gartner (July 2019)

Segment

2018

2019

2020

2021

2022

Communication Services

26,704

26,862

27,650

27,991

28,572

Data Centre Systems

3,167

3,030

3,043

3,031

3,033

Devices

13,268

12,653

12,544

12,653

12,854

IT Services

32,737

34,370

36,000

37,632

39,311

Software

15,093

16,868

18,879

21,028

23,243

 TOTAL

90,970

93,783

98,115

102,335

107,014

In New Zealand, spending on technology products and services is expected to reach NZ$13.4 billion in 2019, up 2.3% from last year, and reach almost $15.2 billion in 2022.

Spending on Technology by Segment, New Zealand, 2018-2022 (Millions of New Zealand Dollars)

Source: Gartner (July 2019)

Segment

2018

2019

2020

2021

2022

Communication Services

5,018

5,025

5,157

5,300

5,431

Data Centre Systems

400

388

382

384

382

Devices

1,957

1,855

1,759

1,726

1,743

IT Services

3,803

3,977

4,168

4,379

4,608

Software

1,952

2,190

2,453

2,736

3,016

 TOTAL

13,130

13,435

13,918

14,525

15,180

“Despite uncertainty fuelled by recession rumours, Brexit, trade wars and tariffs, we expect IT spending to remain flat in 2019,” says Gartner research vice president John-David Lovelock. 

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

“Although an economic downturn is not the likely scenario for either 2019 or 2020, the risk is currently high enough to warrant preparation and planning. 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.”

The enterprise software market will experience the strongest growth in 2019, reaching US$457 billion, up 9% from US$419 billion in 2018. 

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

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, more of the cloud opportunity had been in application software and business process outsourcing. 

Over this forecast period, it will expand to cover additional application software segments, including office suites, content services and collaboration services. 

“Spending in old technology segments, like data centre, will only continue to be dropped,” adds Lovelock.

 Globally, consumer spending as a percentage of total spend is dropping every year in every region due to saturation and commoditisation, especially with PC, laptops and tablet devices. 

Cloud applications allow these devices to have an extended life, with less powerful equipment needed to run new software. This is why the devices market will experience the strongest decline in 2019, down 4.3% to $682 billion in 2019. 

“There are hardly any ‘new’ buyers in the devices market, meaning that the market is now being driven by replacements and upgrades,” says Lovelock. 

“Add in their extended lifetimes along with the introduction of smart home technologies and IoT, and consumer technology spending only continues to drop.”

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. 

Gartner uses primary research techniques, complemented by secondary research sources, to build a comprehensive database of market size data on which to base its forecast. 

The Gartner quarterly IT spending forecast delivers a unique perspective on IT spending across the hardware, software, IT services and telecommunications segments. 

These reports help Gartner clients understand market opportunities and challenges. 

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