Worldwide IT Spend moves to the ‘next normal’ — Analyst

The rebound phase for companies emerging from the pandemic is over, says the Gartner Group. Most companies are now preparing to reach the ‘next normal’ — exiting phase three of the analyst firm’s Covid response model (‘rebounding to the future’) and moving into phase four (‘accelerating opportunities’).

This transition will be accompanied by a bigger spend. Worldwide IT spending will total $4.2 trillion in 2021, up 8.6 per cent from 2020), and will climb 5.3 per cent  to $4.4 trillion in 2022, the Gartner Group said in a recent report.

“CIOs are looking for partners who can think past the digital sprints of 2020 and be more intentional in their digital transformation efforts in 2021. This means building technologies and services that don’t yet exist, and further differentiating their organisation in an already crowded market,” commented Gartner vice president John-David Lovelock.

As many companies still suffer revenue declines, IT spending is accelerating ahead of revenue expectations, the report noted.

“Boards and CEOs are much more willing to invest in technology that has a clear tie to business outcomes, and less so for everything else. For example, the IT services segment is among the top three highest growth areas for 2021 primarily due to a boost in infrastructure-as-a-service spending that supports mission critical workloads and avoids high on-premises costs. The IT services segment is forecast to total $1.2 trillion in 2021, an increase of 9.8 per cent from 2020.

Data analytics is also a target that CIOs say they plan to spend a lot on, the report says, although this has been a consistent priority over the last few years, as has IT security.

A separate report from Computer Economics confirms this picture to some extent.

The overall picture from Computer Economics’ latest survey is one of a “remarkable bounce-back” from the global economic slowdown caused by Covid-19.

“Three-quarters of companies this year are poised to increase their IT operational budgets, a record in the cloud era. Organisations across nearly every sector and company size are planning IT budget increases in line with pre-Covid-19 economic conditions. Given that IT staff head counts have not increased significantly over the past decade due to the efficiencies brought on by the cloud, software as a service (SaaS), and automation, it is a further sign of a rebounding economy that a majority of IT organisations are planning modest head count growth. We continue to see expected increases in spending on digital transformation, SaaS, cloud infrastructure, and data analytics, indicating that IT organizations are not holding back on new investments, and they see a clear path toward a digital future.”

An increased IT spend is good for the economy as a whole, as better systems at all companies generally lead to improved results.

Will it last? Much will depend on the effect of the variants on the global economy.