IT Spending Expected to Grow 6.5 Percent over Five Years: Report

A U.K.-based study on IT spending is bullish for the remainder of the year with single-digit growth forecasts through 2014. Unsurprisingly, cloud computing and service-oriented environments get a lot of attention in the research analysis.

Spending on technology products and services is forecasted to reach $629.3 billion by 2014, according to London-based researchers Business Monitor International, which covers 22 vertical industries. In a July 26 report, BMI forecasted IT spending for 2010 to reach $511.4 billion and to grow at a compound rate of 6.5 percent in five years.

This forecast is a revised figure after PC shipments in the first half of this year grew at a much better rate than expected. IT services is also being forecasted for 6.5 percent growth this year, though BMI noted it is a much lower pace of growth than in the 2006-08 period.

On the enterprise, BMI noted in its market overview that "[b]usinesses are likely to remain cautious in 2010, but upgrade cycles should accelerate in the second half of the year, boosted by sales of Windows 7. The recession may have had a lasting impact on the IT market by creating the conditions for the popularity of low-cost netbooks and notebooks and encouraging consideration of new IT delivery models such as SAAS [software as a service]."

Cloud computing and IAAS (infrastructure as a service) showed up multiple times in the BMI overview with emphasis on IT services and major vendor moves from IBM with its Cast Iron Systems acquisition, Hewlett-Packard contracts with the Department of Homeland Security and HP's EDS mobility contract with the Department of the Treasury. The federal government is increasingly becoming a large driver of cloud services' adoption, wrote BMI:

"Spending on IT services is quite closely correlated with GDP growth: bad news in a recession. One opportunity will be organizations looking for help with how to utilize efficiencies from cloud computing such as SAAS and IAAS, as organizations in those fields look to save money on IT investments. Federal and local governments are one vertical where strong interest in cloud services is being expressed."

Software is forecasted for 6.2 percent growth from 2010 through 2014 with this year being bolstered by leftover migration projects from the deeper recession in 2009. Again, BMI stresses the cloud in software penetration:

"Drivers of demand for enterprise software include increasing operational efficiency, coordinating global supply chains and modernizing logistics and warehouse functions. More investment can be expected to be in utility software and serviced-oriented architectures rather than traditionally packaged PC software."

The report also stresses consumer market drivers in laptop sales, expansion of the tablet market with the launch and success of Apple's iPad and the continued rise of smartphones.