Gartner Says Worldwide IT Spending to Grow 4% in 2021

Worldwide IT spending is projected to total $3.8 trillion in 2021, an increase of 4% from 2020, according to the latest forecast by Gartner, Inc. IT spending in 2020 is expected to total $3.6 trillion, down 5.4% from 2019.

Analysts discussed the outlook for the global IT market during Gartner IT Symposium/Xpo Americas, which is taking place virtually through Thursday.

“In the 25 years that Gartner has been forecasting IT spending, never has there been a market with this much volatility,” said John-David Lovelock, distinguished research vice president at Gartner. “While there have been unique stressors imposed on all industries as the ongoing pandemic unfolds, the enterprises that were already more digital going into the crisis are doing better and will continue to thrive going into 2021.”

All IT spending segments are forecast to decline in 2020 (see Table 1). Enterprise software is expected to have the strongest rebound in 2021 (7.2%) due to the acceleration of digitalization efforts by enterprises supporting a remote workforce, delivering virtual services such as distance learning or telehealth, and leveraging hyperautomation to ensure pandemic-driven demands are met.

Table 1. Worldwide IT Spending Forecast (Millions of U.S. Dollars)

  2019 Spending 2019 Growth (%)   2020 Spending 2020 Growth (%)   2021 Spending 2021 Growth (%)  
Data Center Systems 214,911 1.0 208,292 -3.1 219,086 5.2
Enterprise Software 476,686 11.7 459,297 -3.6 492,440 7.2
Devices 711,525 -0.3 616,284 -13.4 640,726 4.0
IT Services 1,040,263 4.8 992,093 -4.6 1,032,912 4.1
Communications Services 1,372,938 -0.6 1,332,795 -2.9 1,369,652 2.8
Overall IT 3,816,322 2.4 3,608,761 -5.4 3,754,816 4.0

Source: Gartner (October 2020)

Spending on data center systems will experience the second highest of growth of 5.2% in 2021 as hyperscalers accelerate global data center build out and regular organizations resume data center expansion plans and allow staff to be physically back onsite.

Despite the increase in cloud activity in 2020 as organizations shifted to a remote-work-first environment, enterprise cloud spending – which falls into multiple categories – will not be reflected in vendors’ revenue until 2021.

“The spending slowdown that took place from roughly April through August of this year, coupled with cloud service providers’ ‘try before you buy’ programs, is shifting cloud revenue out of 2020,” said Mr. Lovelock. Cloud had a proof point this year — it worked throughout the pandemic, it scaled up and it scaled down. This proof point will allow for accelerated penetration of cloud through 2022.”

“With revenue uncertainty promoting cash from being King to being Emperor, CIOs are now prioritizing IT projects where the time to value is lowest,” said Mr. Lovelock.

“Companies have more IT to do and less money to do it, so they are pulling money out of the areas they can afford, such as mobile phone and printer refreshes, which is why there will be less growth in the devices and communications services segments,” added Mr. Lovelock. “Instead, CIOs are spending more in areas that will accelerate their digital business, such as IaaS or customer relationship management software.”

Moving forward, digital transformation will not be subject to the same ROI justification it was pre-pandemic as the mandate for IT becomes business survival, rather than growth.

More detailed analysis on the outlook for global IT spending is available in the Gartner webinar ‘IT Spending Forecast, 3Q20: Technology Trends Accelerated by COVID.”

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. The most recent IT spending forecast research is available to Gartner clients in “Gartner Market Databook, 3Q20 Update.” This quarterly IT spending forecast page includes links to the latest IT spending reports, webinars, blog posts and press releases.

The following two tabs change content below.
News

News

Stay on top of the latest industry news. Have news to share? We want to help you spread the word. Submit your media releases to news@workflowotg.com.