The latest forecast by Gartner, Inc., projects that worldwide IT spending will total $4.6 trillion in 2023. This marks an increase of 5.1% from 2022. Indeed, demand for IT in 2023 forecasts strongly as enterprises push forward with digital business initiatives. Economic turmoil is spurring some of these.
John-David Lovelock, distinguished VP analyst at Gartner, describes enterprise IT spending as recession-proof. In fact, he says, “…CEOs and CFOs, rather than cutting IT budgets, are increasing spending on digital business initiatives.”
Lovelock adds, “Economic turbulence will change the context for technology investments, increasing spending in some areas and accelerating declines in others, but it is not projected to materially impact the overall level of enterprise technology spending.”
Nevertheless, Lovelock acknowledges, inflation has cut into consumer purchasing power in almost every country around the world. Thus, he observes, reduced consumer purchasing power is such that many consumers are deferring 2022 device purchases until 2023. This, he observes, is “…driving spending on devices down 8.4% in 2022 and 0.6% in 2023.”
Gartner analysts have been discussing the trends that are impacting the IT market during Gartner IT Symposium/Xpo, which concludes today.
The technologies that are being maintained versus those driving the business are evident by their projected growth rates in 2023. There is sufficient spending within data-center markets to maintain existing on-premises data centers. However, new spending continues to shift to cloud options. Indeed, the 11.3% projected growth for software spending in 2023 is evidence of this.
Efficiency-Driven Digital Investments
Conventional wisdom calls for reducing costs, including IT costs, in a down or deteriorating economy. However, a July 2022 Gartner survey of more than 200 CFOs found that 69% plan to increase their spend on digital technologies. Meanwhile, the 2023 Gartner CIO and Technology Executive Survey found CIOs being tasked with accelerating time to value on digital investments.
According to Lovelock, “Companies will use digital technology primarily to reshape their revenue stream, adding new products and services, changing the cashflow of existing products and services, as well as changing the value proposition of existing products and services.” This trend, he says, feeds the shift from buying technology to building, composing and assembling technology to meet business drivers. This shift is foundational to the growth of cloud-based over on-prem for new IT spending.
During the current economic uncertainty, Lovelock observes, organizations are looking to realize operations efficiency, cost reductions and/or cost avoidance. Accordingly, he says, “…more traditional back-office and operational needs of departments outside IT are being added to the digital-transformation project list.”
More detailed analysis on the outlook for global IT spending is available in the Gartner webinar “IT Spend Forecast, 3Q22: Is IT Spending Recession Proof?” Learn about the top priorities for CIOs in 2022 in the complimentary Gartner ebook 2022 Leadership Vision for Chief Information Officers.
Gartner’s methodology for its IT-spending forecast relies heavily on rigorous analysis of sales by over 1,000 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. Those resources, of course, are the foundation of its data.
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