In 2016, the worldwide IT spending will total to $3.49 trillion, recording a decline of 0.5% compared to the spend in 2015, says Gartner.
According to John-David Lovelock, research vice president at Gartner, the organizations tend to tighten their belts due to the economic uncertainties. However, the spending in IT is inevitable in the digital era. This makes the business leaders to engage in tough cost optimization efforts, he added.
“As an example, the savings from legacy system optimisation and enhancements are being redirected to fund digital initiatives. It’s about doing more with the same funds,” said Lovelock. “Typically, less than 10% of the organisations are in cost optimisation or cost cutting mode. However, the need to spend on digital business initiatives in a time when revenue growth does not support runaway IT budgets is forcing more organisations to optimise as a first step. Business processes, as well as IT, are undergoing optimisation — digital business requires both. However, many CIOs are reluctant to raise this possibility, given the cultural and political barriers to optimising business costs,” Lovelock elucidated the scenario.
According to Lovelock, most traditional IT now has a ‘digital service twin’ — license software has cloud software, servers have Infrastructure as a service, and cellular voice has VoLTE. The things that once had to be purchased as an asset can now be delivered as a service. Initially, a large upfront payment was done for digital service twin offerings, but now it has reduced to a smaller reoccurring monthly amount. Hence, the same level of activity has a very different annual spend.
Gartner’s report further stated that the device market will decline 3.7% in 2016. The global saturation of smartphone market, the decline in PC and ultra-mobile markets, economic conditions in many countries, all combine to lead to the decline.
The spending on data centre systems will reach $175 billion in 2016, marking a 2.1% increase from 2015. The network upgrades that is seen in 2015 will continue throughout 2016, which will provide this increase in spending. The external-controller-based storage segment continues to suffer from ongoing challenges. In the server segment, demand from hyperscale buyers is expected to reduce in 2016, particularly in regions that are suffering from economic challenges, such as Eurasia. The mainframe refresh, which benefited the market in 2015, is expected to abate in 2016, also inhibiting the overall growth figures.
The global enterprise software spending is on pace to total $321 billion, a 4.2% increase from 2015. The operating system forecast has been downgraded, as there are delays in the adoption of Windows 10 and Windows Server 2016. Spending in the IT services market is expected to return to growth in 2016, totalling $929 billion, up 2.1 % from 2015.
The telecom service spending is projected to decline 2.0% in 2016, with spending reaching $1.4 trillion. Continuing economic downturns in major markets such as Russia and Brazil would dampen the spending in both fixed and mobile voice. Mobile data spending will grow, owing to improved pricing on bandwidth, mobile app and 4G/LTE network availability.