Enterprise software will be the fastest-growing market segment, climbing 10.5% to $503 billion
Global spending on information technology is expected to reach $3.9 trillion in the year ahead, up 3.4% from 2019, as companies ward off political and economic uncertainties by investing in cloud software aimed at cutting costs, research firm Gartner Inc. says.
The firm also expects world-wide IT spending to exceed $4 trillion by 2021, according to a report released Wednesday.
Enterprise software will continue to lead overall spending this year as the fastest-growing market segment, climbing 10.5% from 2019 to $503 billion, the report said.
Companies are expected to steer the bulk of that spending into cloud software and services, which are accessed online from cloud providers on a pay-as-you-go basis, rather than purchased outright. That enables companies to minimize the need for costly in-house servers, storage, networking and other hardware components.
Spending on data centers declined 2.7% last year to $205 billion, while software rose 8.5% to $456 billion, Gartner said. The firm expects cloud-based tools to outgrow spending on traditional IT through 2022.
John-David Lovelock, Gartner’s vice president of research, said chief information officers continue to prioritize spending on cloud services and other cost-cutting tools as a way to guard against a potential slowdown, even as fears of a recession are fading.
The global economy is expected to grow 3.4% next year, up from 3% in 2019, according to a forecast in October by the International Monetary Fund. The pace of U.S. economic growth has remained steady at a 2% annual rate in recent months, according to government measurements.
“People have been predicting a recession for some time, but we’re not seeing it in our numbers,” Sri Shivananda, chief technology officer at PayPal Holdings Inc.
That was the consensus among 30 technology executives last month who responded to CIO Journal’s annual end-of-year questionnaire on their IT strategies for the year ahead.
“We have efficiency goals every year to improve our run-the-business costs and hedge our risks during downturns,” said Vijay Sankaran, chief information officer at TD Ameritrade Holding Corp.
Although chief executive officers continue to cite economic uncertainties as a top concern for 2020, according to a survey by the Conference Board, many companies that girded for a slump last year are now refocusing efforts on revenue growth, Mr. Lovelock said.
Kimberly Anstett, CIO at document-storage firm Iron Mountain Inc., said this year she plans to leverage technology aimed at running the business “in the most automated, reliable manner” to reduce costs and grow.
“From my perspective, the role of the CIO is always focused on positioning the enterprise to run effectively and efficiently as well as to look for ways to drive revenue,” Ms. Anstett said.
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