Research from Gartner overnight released projections in which it predicts IT spending to grow to $US4.1 trillion worldwide in 2021, and to $A98.3 billion in Australia — up 4.1 per cent.
This growth spans across IT sectors including data centre systems, enterprise software, devices, IT services and communications services.
The funding for digital transformation initiatives is projected to come from outside IT departments and instead be charged as a cost of revenue or cost of goods sold (COGS). This suggests that IT has become an integral part of business delivery and leaders are recognising its value across the broad scope of business operations.
According to John-David Lovelock, Research Vice President at Gartner, “Not only does this shift IT from a back-office role to the front of business, but it also changes the source of funding from an overhead expense that is maintained, monitored and sometimes cut, to the thing that drives revenue.”
While economic activity certainty recovers as we emerge from the pandemic, businesses will be focussed on investing in technologies that improve the productivity of the workforce, with employee experience and well-being front of mind.
“Last year, IT spending took the form of a ‘knee jerk’ reaction to enable a remote workforce in a matter of weeks. As hybrid work takes hold, CIOs will focus on spending that enables innovation, not just task completion,” says Lovelock.
Gartner forecasts that the highest growth areas of digital spending will come from devices and enterprise software, together making up 24 per cent of global IT spending. Results are similar for the Australian market, where investing in devices and enterprise software are the highest growth areas, where spending will increase by 9 per cent and 7.3 per cent respectively.
Investing in devices is set to drop off in 2022, though all segments are expected to see continued positive growth.
Economic recovery is, unsurprisingly, expected to vary based on region. China’s IT spending levels have already surpassed 2019 levels, North America and Western Europe are set to recover in late 2021, and projections for IT spending in Latin America are forecast not to recover until 2024.