Gartner: IT Spending Will Decline In 2016 - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

IoT
IoT
Cloud

Gartner: IT Spending Will Decline In 2016

Gartner expects global IT spending to dip slightly in 2016, to $3.49 trillion. Faced with spending constraints, but the need to advance, many are optimizing by spending on services instead of assets.

7 Reasons To Convert To A Private Cloud
7 Reasons To Convert To A Private Cloud
(Click image for larger view and slideshow.)

Worldwide IT spending is expected to total $3.49 trillion in 2016, down 0.5% from last year, Gartner reported April 7, noting that this was down from its last-quarter forecast of a 0.5% increase.

The change, according to Gartner, is due to fluctuations in currency, but also a balancing act between fiscal caution and the need to invest in digital business areas.

"There is an undercurrent of economic uncertainty that is driving organizations to tighten their belts, and IT spending is one of the casualties," John-David Lovelock, a Gartner research vice president, wrote in a statement.

"Business leaders know that they need to became digital businesses or face irrelevance in a digital world," Lovelock continued. "To make that happen, leaders are engaging in tough cost optimization efforts in some areas to fund digital business in others."

(Image: cybrain/iStockphoto)

(Image: cybrain/iStockphoto)

For example, Lovelock wrote, some companies are taking what they're saving from optimizing legacy systems and using it to invest in digital initiatives.

While fewer than 10% of organizations, typically, are in a cost-cutting or cost-optimization mode, Lovelock notes, the need to spend on new initiatives during a time when revenue growth doesn't support such an idea, "is forcing more organizations to optimize as a first step."

Such optimization often takes the form of turning to what Gartner calls a "service twin" -- VoLTE instead of cellular, cloud software instead of service software. In short, companies are redirecting their spending from assets to services.

Learn to integrate the cloud into legacy systems and new initiatives. Attend the Cloud Connect Track at Interop Las Vegas, May 2-6. Register now!

Gartner expects spending in the IT services market to return to growth this year, and reach $929 billion, up 2.1% from 2015.

Telecom service spending is expected to decline by 2%, to $1.4 trillion, although mobile data spending will be an area of exception, encouraged by improved pricing on bandwidth, mobile apps, and 4G/LTE network availability.

Spending on data center systems is also expected to grow, topping 2015 spending by 2.1%, for a total of $175 billion. Enterprise network equipment purchasing, which performed better than expected in 2015, will again be a bright spot, according to the firm.

The device market, however -- which includes smartphones, tablets, PCs, printers, and ultramobiles -- is headed for a decline of 3.7% below 2015 spending.

"The smartphone market is approaching global saturation, slowing growth," according to Gartner. Declines in PC and ultramobile spending will be geographically specific, it added, with economic conditions amplifying other factors.

Michelle Maisto is a writer, a reader, a plotter, a cook, and a thinker whose career has revolved around food and technology. She has been, among other things, the editor-in-chief of Mobile Enterprise Magazine, a reporter on consumer mobile products and wireless networks for ... View Full Bio

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
Comments
Newest First  |  Oldest First  |  Threaded View
John Mike
50%
50%
John Mike,
User Rank: Apprentice
4/8/2016 | 9:34:28 AM
IT Spending May Go Down in 2016
With the above analysis, it may happen that the IT spending may go down. But technology is changing at a much faster rate so are the services demanded by the businesses in today's era. Whether it's related to the clients' requirements, improvement in operations or any other field, the businesses are highly dynamic these days. The providers offering the IT services can understand only as to what kind of services are required by the individual customers. Thebes IT services provider meet the client's needs and deliver the services in an effective and efficient manner. www.thebesgroup.co.uk/it-services/
Slideshows
9 Steps Toward Ethical AI
Cynthia Harvey, Freelance Journalist, InformationWeek,  5/15/2019
Commentary
How to Assess Digital Transformation Efforts
Lisa Morgan, Freelance Writer,  5/14/2019
Commentary
Is AutoML the Answer to the Data Science Skills Shortage?
Guest Commentary, Guest Commentary,  5/10/2019
White Papers
Register for InformationWeek Newsletters
2018 State of the Cloud
2018 State of the Cloud
Cloud adoption is growing, but how are organizations taking advantage of it? Interop ITX and InformationWeek surveyed technology decision-makers to find out, read this report to discover what they had to say!
Video
Current Issue
A New World of IT Management in 2019
This IT Trend Report highlights how several years of developments in technology and business strategies have led to a subsequent wave of changes in the role of an IT organization, how CIOs and other IT leaders approach management, in addition to the jobs of many IT professionals up and down the org chart.
Slideshows
Flash Poll