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Gartner Cuts 2017 Global IT Spending Forecast, But Sees Silver Linings

Gartner has reduced its worldwide IT spending projections for the second time this year, now forecasting a 2.4 percent increase in 2017 to $3.5 trillion, down from initial estimates of 3 percent.

The news wasn’t all bad in Gartner’s second quarter report, however. For one of the first times, at least some amount of spending growth is projected this year in all five major segments: communications services, software, devices, IT services and data center systems.

Enterprise software is expected to see the largest percentage growth among the five, climbing 7.6 percent by year’s end to $351 billion, then 8.6 percent in 2018 to $381 billion.

IT services will grow 3.1 percent in 2017 to $922 billion and another 4.7 percent in 2018 to $966 billion, Gartner predicts, while data center systems will see modest growth of 0.3 percent in 2017 to $171 billion and a bigger bump of 1.2 percent in 2018 to $173 billion.

In a statement, Gartner Vice President and Distinguished Analyst John-David Lovelock attributed much of the growth across all categories to new and disruptive technologies.

“The impact of digital business is giving rise to new categories; for example, the convergence of “software plus services plus intellectual property,” Lovelock said. “These next-generation offerings are fueled by business and technology platforms that will be the driver for new categories of spending. Industry-specific disruptive technologies include the Internet of Things (IoT) in manufacturing, blockchain in financial services (and other industries), and smart machines in retail. The focus is on how technology is disrupting and enabling business.”

In the United States — which makes up 28.5 percent of the global IT sales market — technology spending is expected to increase 3.9 percent in 2017.

Let’s take a closer look at some of the categories, as they relate to managed service providers (MSPs) and value-added resellers (VARs).

Gartner Software Spending Forecast 2017

Growth in overall software sales is expected to hover between 9 and 12 percent in each year of the forecast period, which runs through 2021.

Enterprise applications software will lead the pack with 11.1 percent growth this year, Gartner said. Infrastructure software sales is expected to grow 6.5 percent this year.

Cloud is driving much of that growth, allowing companies do more and transition faster, Lovelock said in a webinar explaining the Q2 forecast. Sales of cloud ERP, CRM and supply chain management software in particular will be strong in 2017 and beyond, he said.

IT Services

Business IT services are predicted to get a 4.8 percent bump by year’s end, while IT product support will remain almost flat with growth of just 0.2 percent.

Enterprise mobile services will get a 1.7 percent boost this year, while enterprise fixed services are expected to decline 2.2 percent.

Enterprise Storage

The overall storage market is growing, but not in legacy segments, Gartner Research VP Roger Cox said in the webinar. Most of the growth is coming from cloud and hyperconverged integrated systems (HCIS).

Cox predicts dramatic changes for this segment over the next five years. Spending on hybrid and traditional hard disk drive (HDD) arrays will decline from 80 percent of total enterprise storage spending to just 20 percent by 2021, he said.

Solid-state arrays (SSAs) will grow at lightning speed with sales increasing more than 30 percent over the five-year period, Cox said. By 2021, the SSA market is predicted to comprise more than 60 percent of the overall enterprise storage market.

As these changes occur and SSAs continue to resolve the “need for speed,” Cox said, new vendors are increasingly taking market share from legacy vendors that have been slow to keep up.

Network Connections

Spending on network equipment is on track for a five-year decline with price declines across the board, Gartner predicts. 100G and 25G switches are expected to be the only growth market within the segment.

Devices

Overall device sales will remain fairly flat this year because the market is saturated, but there’s good news for enterprise device sales.

PC growth in the enterprise will be 3 percent as companies continue to transition to Windows 10, Gartner predicts, while enterprise PC and tablet sales will climb 3 percent as well and enterprise mobile phone sales will increase 1.7 percent.

Unsurprisingly, enterprise printer sales will continue to decline at a rate of 2.4 percent.

For more information, an on-demand version of the Gartner worldwide IT spending webinar is available on the company’s website.

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