Global IT spending to be flat in 2016: Gartner

Worldwide IT spending is forecast to be flat in 2016 reaching $ 3.41 trillion, up from last quarter’s forecast of negative 0.5 per cent growth, research firm Gartner said.

The change in the forecast is mainly due to currency fluctuations, it said in a statement. “The current forecast assumes that the UK would not exit the European Union. With the UK’s exit, there will likely be an erosion in business confidence and price increases which will impact the UK, Western Europe and worldwide IT spending,” Gartner Research Vice President John-David Lovelock said.

While the UK has embarked on a process to change, that change is yet to be defined. The “leave” vote will quickly affect IT spending in the UK and in Europe, while other changes will take longer. Staff may be the largest immediate issue.

The long-term uncertainty in work status will make the UK less attractive to new foreign workers. Retaining current non-UK staff and having less access to qualified new hires from abroad will impair UK IT Departments. “2016 marked the start of an amazing dichotomy. The pace of change in IT will never again be as slow as it is now, but global IT spending growth is best described as lacklustre,” Lovelock said.

2016 is the year that will see business focus turning to digital business, the Internet of Things and even algorithmic business, he added. “To fund these new initiatives, many businesses are turning to cost optimisation efforts centering around the new digital alternatives to save money, simplify operations and speed time to value. It is precisely this new breadth of alternatives to traditional IT that will fundamentally reshape what is bought, who buys it and how much will be spent,” Lovelock said.

Data centre systems’ spending is projected to reach USD 174 billion in 2016, a 2 per cent increase from 2015, driven by strong growth in Greater China and Western Europe and a strong refresh cycle in North American enterprise network equipment market.

Global enterprise software spending is on pace to total USD 332 billion, a 5.8 per cent increase from 2015 with North America being the dominant regional driving force behind the growth, Gartner said.

Devices spending is projected to total USD 627 billion by the end of 2016.

The lacklustre economic issues surrounding Russia, Japan and Brazil will hold back demand and worldwide PC recovery in 2016, Gartner said.

Additionally, Windows 10 upgrades have further led to PC buying being delayed — consumers are willing to use older PCs longer, once they are upgraded to Windows 10, it added.

Spending in the IT services market is expected to increase 3.7 per cent to total USD 898 billion. Japan is the fastest-growing region for IT services spending with 8.9 per cent growth.

Communications services spending is projected to total USD 1.38 trillion in 2016, down 1.4 per cent from 2015.

“Japan leads the growth in communications services, with 8.3 per cent growth, while Greater China adds the most dollars to spend with just more than USD 8.3 billion,” Gartner said.

Eastern Europe, Western Europe and North America are forecast to decrease as price wars and declining usage affect virtually all communications services markets, it added.