When I first started covering the enterprise IT market the global economy was in full blown crisis – spending cuts were the name of the game and technology strategies were more often than not geared towards consolidation and cost-cutting, as opposed to putting innovation in. Which, of course, was necessary at the time and also had its benefits. IT was seen as a core area where money could be saved and as a result CIOs were forced to take a long hard look at their estates to figure out how things could be simplified.
However, as the global economy slowly begins to recover I've definitely noticed a shift in focus. I'm now finding myself having conversations with technology buyers where they aren't being driven by how many dollars they can save on the balance sheet, but rather how internet-driven technologies, applications and data analysis can be used to drive revenues at the top. Which, at least forme, is a nice change.
Gartner's latest worldwide spending forecast for the coming year is a good bit of hard analysis that affirms this perception. The latest figures coming out of the analyst house suggest that IT spending is set to increase 3.2 percent globally in 2014, compared to the previous year, reaching some $3.8 trillion. The forecast takes into account all of the leading technology trends across the hardware, software, IT services and telecoms markets.
Although a top level view of growth is encouraging – a clear sign that budgets are being freed up again and confidence is creeping back into the market – a further breakdown of the figures brings even better news for digital decision makers. The main point being that growth in software spend, with data management playing a key role, is outpacing the rest of the market by at least two percentage points when compared to other areas.
As Richard Gordon, managing VP at Gartner, simply put it:
"Globally, businesses are shaking off their malaise and returning to spending on IT to support the growth of their business.”
Software, software, software
So, according to Gartner, spend in the enterprise software market is set to reach a total of $320 billion in 2014. Although this is quite a bit less than some other areas (more on that later), it's the rate of growth that is interesting. Enterprise software spend is set grow some 6.9 percent this year, up two percentage points on last year, and more than two percentage points higher than both IT Services and Devices. It is also more than double the growth of data centre spend.Gordon said:
"The Nexus of Forces (the convergence of social, mobile, cloud and information) continues to drive growth across key major software markets, such as CRM, database management systems (DBMSs), data integration tools and data quality tools.
"In fact, organizational adoption of data management technologies to support the Nexus will cause spending on DBMSs to surpass operating systems, making the former the largest enterprise software market in 2014."
This rings true to a lot of what I'm seeing at the moment. Decision makers and buyers have spent the last year or two getting over the 'hype' of these big four trends and the dust has begun to settle. They are now beginning to pilot new technologies and are spending big on new strategies that encompass a lot of this stuff – particularly on the data front. Businesses are beginning to recognise, particularly the ones with a big online play, that the better they get to know their end users, the more revenues they can drive by offering that 'seamless, personalised experience'.
What about the rest?
Okay, even though I get excited about the software and data points (let's face it, the interesting ones) here are some of the main things that were pulled out from the other trends:
- The devices market (PCs, ultramobiles, mobile phones and tablets) is forecast to return to growth in 2014, with worldwide spend to reach $689 billion. Gartner claims that demand for highly priced premium phones is slowing, with buyers in 'mature countries' preferring mid-tier premium phones, while those in emerging countries favouring low-end Android phones.
- Data centre spend is expected to reach $143 billion in 2014, a 2.3 percent increase from 2013. This is largely being driven by demand for cloud and mobility services.
- IT services is forecast to total $964 billion in 2014, up from 4.6 percent last year. According to Gartner, IT services buyers are shifting spending from consulting and planning to implementation.
- Telecom services spend will grow 1.3 percent in 2014, with spending set to reach $1.655 trillion.
Here's a nice little diagram from Gartner with an overview of all the key stats:
Good news all round. Let's hope the boost in spend delivers some interesting projects with innovative solutions.
Bring on 2014. But remember, spend wisely.