The latest IDC report indicates that IT heads and CIOs at enterprises are not the top decision makers for technology spending.
Technology spending by business decision makers will overtake technology spending by the IT department in 2019, said IDC.
Businesses will spend $1.67 trillion on technology — hardware, software, and services — in 2018.
50.5 percent will come from the IT budget while 49.5 percent will come from the budgets of technology buyers outside of IT.
IT department’s IT spending includes IT-funded purchases as well as joint projects funded by IT. Business decision maker’s IT spending includes business-funded purchases as well as joint projects funded by business buyers and shadow IT projects funded by the business decision makers without IT involvement.
The compound annual growth rate (CAGR) for business decision makers’ spending over the 2016-2021 forecast period is forecast to be 6.9 percent compared to the 3.3 percent CAGR for IT spending.
Technology spending by business decision maker in 2018
Discrete manufacturing – 53 percent
Process manufacturing — 52 percent
Professional services — 51 percent
Technology spending by IT department in 2018
Banking — 52 percent
Telecommunications — 66 percent
Two industries – construction and telecommunications – will see their technology spending led by the IT department by 2021.
Eileen Smith, program director, Customer Insights & Analysis at IDC, said: “Business decision makers will fund 50 percent of their total technology purchases in 2018, but with the ease of cloud software, business functions on average will fund 70 percent of application investments this year.”
Business decision makers to spend
$178 billion in applications
$104 billion in business consulting services
$97 billion in business process outsourcing (BPO)
$90 billion in project-oriented services
IT department to spend
$151 billion on outsourcing
$118 billion in project-oriented services
$91 billion in network equipment
Cloud will be an important investment area throughout the forecast, with LOB spending on infrastructure as a service (IaaS) growing at a 33.2 percent CAGR while IT spending on IaaS will see a 30.7 percent CAGR.
The United States will be the largest geographic market for technology spending in 2018 with nearly 60 percent of its $730 billion coming from the line of business. The second largest market, Western Europe, will see 52 percent of its $399 billion in technology spending coming from the IT department.
Technology spending in Japan and China will be led by the IT department (60 percent and 68 percent, respectively). United States and Canada will be led by LOB spending in 2018. They will be joined by Western Europe in 2021.