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Global IT spending to hit $3.8tn in 2019

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IT services will be a key driver of IT spending in 2019.
IT services will be a key driver of IT spending in 2019.

Worldwide IT spending is projected to total $3.8 trillion in 2019, an increase of 3.2% from the expected spending of $3.7 trillion in 2018.

This is according to the latest forecast by market analyst firm Gartner, which says enterprise software spending is forecast to experience the highest growth in IT spending with an 8.3% increase in 2019.

"While currency volatility and the potential for trade wars are still playing a part in the outlook for IT spending, it is the shift from ownership to service that is sending ripples through every segment of the forecast," says John-David Lovelock, research vice-president at Gartner.

"What this signals, for example, is more enterprise use of cloud services; instead of buying their own servers, they are turning to the cloud. As organisations continue their digital transformation efforts, shifting to 'pay for use' will continue. This sets enterprises up to deal with the sustained and rapid change that underscores digital business."

Gartner says software-as-a-service is driving growth in almost all software segments, particularly customer relationship management (CRM), due to increased focus on providing better customer experiences.

It believes cloud software will grow at more than 22% this year compared with 6% growth for all other forms of software.

While core applications such as enterprise resource planning, CRM and supply chain continue to get the lion share of dollars, security and privacy are of particular interest right now, says Gartner.

It points out that 88% of recently surveyed global CIOs have deployed, or plan to deploy cyber security software and other technology in the next 12 months.

In 2018, the market analyst firm says, data centre systems are expected to grow 6%, buoyed by a strong server market that saw spending growth of more than 10% over the last year, and in 2018 will come in at 5.7% growth.

However, by 2019, servers will shift back to a declining market and drop 1% to 3% every year for the next five years, Garner notes, adding that this, in turn, will impact overall data centre systems spending as growth slows to 1.6% in 2019.

The firm points out that IT services will be a key driver for IT spending in 2019 as the market is forecast to reach $1 trillion in 2019, an increase of 4.7% from 2018.

It says an expected global slowdown in economic prosperity, paired with internal pressures to cut spending, is driving organisations to optimise enterprise external spend for business services such as consulting.

In a recent Gartner study, 46% of organisations indicated IT services and supplier consolidation were in their top three most-effective cost-optimisation approaches.

Worldwide spending for devices (PCs, tablets and mobile phones) is forecast to grow 2.4% in 2019, reaching $706 billion, up from $689 billion in 2018.

Gartner says demand for PCs in the corporate sector has been strong, driven by Windows 10 PC hardware upgrades that should continue until 2020. However, the PC market may see some impact from the Intel CPU shortage. While this shortage will have some short-term impacts, Gartner does not expect any lasting impact on overall PC demand.

The current expectation is that the shortage will continue into 2019, but Intel will prioritise the high-end CPU as well as the CPUs for business PCs, says Gartner, adding that in the meantime, AMD will pick up the part of the market where Intel cannot supply CPUs.

"PCs, laptops and tablets have reached a new equilibrium state. These markets currently have stable demand from consumers and enterprises. Vendors have only subtle technology differentiation, which is pushing them to offer PC-as-a-service in order to lock clients into multiyear recurring revenue streams and offer new bundles of service options," says Lovelock.

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