Progression from big data to algorithms to machine learning to AI among main growth drivers
Worldwide IT spending is projected to total US$3.7 trillion in 2018, an increase of 4.5 per cent from 2017, according to the latest forecast by Gartner.
"Global IT spending growth began to turn around in 2017, with continued growth expected over the next few years. However, uncertainty looms as organisations consider the potential impacts of Brexit, currency fluctuations, and a possible global recession," says John-David Lovelock, research vice president at Gartner.
"Despite this uncertainty, businesses will continue to invest in IT as they anticipate revenue growth, but their spending patterns will shift. Projects in digital business, blockchain, Internet of Things(IoT), and progression from big data to algorithms to machine learning to artificial intelligence (AI) will continue to be main drivers of growth."
Enterprise software continues to exhibit strong growth, with worldwide software spending projected to grow 9.5 per cent in 2018, and it will grow another 8.4 per cent in 2019 to total $421 billion (see table below).
Organisations are expected to increase spending on enterprise application software in 2018, with more of the budget shifting to software as a service (SaaS).
The growing availability of SaaS-based solutions is encouraging new adoption and spending across many subcategories, such as financial management systems (FMS), human capital management (HCM) and analytic applications.
Worldwide IT Spending Forecast (Billions of US$)
The devices segment is expected to grow 5.6 per cent in 2018. Last year, this segment experienced growth for the first time in two years with an increase of 5.7 per cent.
End-user spending on mobile phones is expected to increase marginally as average selling prices continue to creep upward even as unit sales are forecast to be lower.
PC growth is expected to be flat in 2018 even as continued Windows 10 migration is expected to drive positive growth in the business market in China, Latin America and Eastern Europe.
The impact of the iPhone 8 and iPhone X was minimal in 2017, as expected. However, iOS shipments are expected to grow 9.1 per cent in 2018.
"Looking at some of the key areas driving spending over the next few years, Gartner forecasts $2.9 trillion in new business value opportunities attributable to AI by 2021, as well as the ability to recover 6.2 billion hours of worker productivity," says Lovelock.
“That business value is attributable to using AI to, for example, drive efficiency gains, create insights that personalise the customer experience, entice engagement and commerce, and aid in expanding revenue-generating opportunities as part of new business models driven by the insights from data."
Capturing the potential business value from AI will require spending, especially when seeking the more near-term cost savings, he says.
“Spending on AI for customer experience and revenue generation will likely benefit from AI being a force multiplier — the cost to implement will be exceeded by the positive network effects and resulting increase in revenue.”
Send news tips and comments to email@example.com
Follow CIO New Zealand on Twitter:@cio_nz
Join the CIO New Zealand group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.