10 Key Findings From Gartner’s Rosy Worldwide IT Spending Study

 
 
By Don Reisinger  |  Posted 2016-10-20
 
 
 
 
 
 
 
 
 
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    10 Key Findings From Gartner’s Rosy Worldwide IT Spending Study
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    10 Key Findings From Gartner’s Rosy Worldwide IT Spending Study

    Gartner predicts a pickup in IT spending in 2017, thanks to increasing interest in software and communications services. This is a welcome change after a few years of contraction in some IT segments.
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    Worldwide IT Spending Is Set to Pick Up
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    Worldwide IT Spending Is Set to Pick Up

    The worldwide IT market will see major growth in 2017, according to Gartner. The research firm predicts that total global IT spending next year will rise 2.9 percent to $3.5 trillion. By the end of 2016, Gartner believes total spending will reach $3.4 trillion, a 0.3 percent decline compared to 2015.
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    Software Will Be a Bright Spot
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    Software Will Be a Bright Spot

    Software will continue to be one of the major contributors to the IT market’s growth. Next year, software spending will jump 7.2 percent to $357 billion. Despite a troubled market in 2016, software was one of the few bright spots, estimated to grow 6 percent year over year to $333 billion.
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    IT Services Spending Remains on Growth Curve
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    IT Services Spending Remains on Growth Curve

    The IT services market segment will watch its revenues climb 4.8 percent next year to $943 billion. IT services has been growing consistently over the past several years, and likely will close out 2016 with $900 billion in revenue.
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    Hardware Spending Will Edge Up
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    Hardware Spending Will Edge Up

    Hardware spending has been a troubled segment for years, but Gartner believes that will change next year. The company says that the devices segment will grow its revenue by 0.4 percent year over year to land at $600 billion in revenue.
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    Communications Services Will Be a Major Growth Sector
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    Communications Services Will Be a Major Growth Sector

    Communications services continue to be one of the main reasons the IT industry is so big. This year, communications services revenue will hit $1.38 billion, but will top $1.4 billion by the end of next year. There are no signs of communications services slowing down any time soon.
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    Brexit Will Impact Spending
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    Brexit Will Impact Spending

    Although the IT market has been somewhat politics-proof in the past, that’s not the case any longer. According to Gartner, the U.K.’s decision to exit the European Union, known as Brexit, had a profoundly negative impact on global IT spending. Companies around the world have taken a wait-and-see approach to Brexit, causing them to spend less. Changes in currency exchange rates also have put a pause on spending. However, in 2017, Gartner believes companies will invest more heavily in IT to position themselves more effectively to manage the Brexit fallout.
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    Data Centers Aren’t Catching Up
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    Data Centers Aren’t Catching Up

    Although data center spending will grow by 2 percent year over year in 2017, it’s still a soft spot in the broader marketplace. Next year, data center systems will generate $177 billion in revenue, making the segment substantially smaller than any other. The second-smallest segment, software, will generate $357 billion in revenue next year.
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    Don’t Expect the U.S. Election to Affect Spending
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    Don’t Expect the U.S. Election to Affect Spending

    Although U.K. politics will affect IT spending, U.S. politics will not. Gartner analyzed how the 2016 presidential election could affect IT spending and found that regardless of who wins—Republican Donald Trump or Democrat Hillary Clinton—there will be no meaningful impact on how much companies spend on IT.
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    What’s Happening in 2016?
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    What’s Happening in 2016?

    Last year and into the beginning of this year, most analysts—including Gartner—believed the IT industry will would see significant revenue growth in 2016. However, global IT spending was taken down a few pegs by the Brexit vote and unexpected softness in demand for all types of hardware, including tablets, PCs and, to a lesser extent, smartphones. In short, a confluence of unexpected events negatively affected the industry.
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    The Biggest Winners and Losers of 2016
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    The Biggest Winners and Losers of 2016

    Despite troubles facing the IT industry this year, there are expected to be some winners. For instance, IT services spending is expected to grow 3.9 percent year over year to $900 million in revenue. The software segment will grow at an even quicker 6 percent annual growth rate to land at $333 million. One of the key soft spots was hardware sales, which are expected to fall 7.5 percent year over year in 2016. Communications services are expected to see a revenue decline of 1.1 percent for the year.
 

The global IT market generates trillions of dollars in revenue each year. However, in the past few years, some segments, such as hardware sales, have shrunk. Other segments, including data center systems, have shown only modest revenue growth. So far this year, total IT spending is much lower than it was expected to be, which means IT providers are looking for a rebound in spending during 2017. According to new research from Gartner, they might get their wish. The research firm on Oct. 19 issued its Worldwide IT Spending Forecast, which projects that IT spending will pick up in 2017, thanks to increasing interest in software and communications services. Hardware spending, which has taken a beating in the past few years, is also expected to increase in 2017, according to Gartner. As in the past, IT services will continue to be in high demand. Overall, Gartner says, the IT market’s prospects for 2017 look bright. This slide show will highlight some of the major points in the Gartner forecast, which was collected from an analysis of thousands of sales worldwide. 

 
 
 
 
 
Don Reisinger is a freelance technology columnist. He started writing about technology for Ziff-Davis' Gearlog.com. Since then, he has written extremely popular columns for CNET.com, Computerworld, InformationWeek, and others. He has appeared numerous times on national television to share his expertise with viewers. You can follow his every move at http://twitter.com/donreisinger.
 
 
 
 
 
 

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