The latest forecast by Gartner reveals that worldwide IT spending is set to reach an impressive $4.7 trillion in 2023, showcasing a robust increase of 4.3 percent from the previous year.
As organizations continue to face challenges in recruiting IT talent, CIOs are strategically redirecting their investments towards technologies that foster automation and efficiency, leading to exponential growth with fewer employees, Gartner said in its latest report on IT spending.
A notable shift in digital business transformations is underway, as IT projects move away from external-facing deliverables like revenue and customer experience. Instead, the focus is shifting towards inward-facing initiatives that prioritize optimization, according to John-David Lovelock, Distinguished VP Analyst at Gartner.
In 2023, the distribution of IT spending across different sectors will be as follows:
Data Center Systems: $217.88 billion (-1.5 percent)
Devices: $700.023 billion (-8.6 percent)
Software: $911.663 billion (+13.5 percent)
Enterprise Software: $1,420.905 billion (+8.8 percent)
Communication Services: $1,461.662 billion (+2.7 percent)
The software segment is expected to experience substantial growth in 2023, with organizations increasing their utilization and reallocating funds towards core applications and platforms. Prominent beneficiaries of this trend will be enterprise resource planning (ERP) and customer relationship management (CRM) applications. Moreover, vendor price increases will further bolster software spending throughout the year.
However, the devices segment is facing significant challenges, with spending projected to decline by 8.6 percent in 2023. This decline is attributed to the ongoing impact of inflation on consumer purchasing power, leading to longer device refresh cycles and reduced discretionary spending. It is predicted that devices spending may not fully recover to 2021 levels until at least 2026.
While generative artificial intelligence (AI) remains a priority for many business and IT leaders, it is yet to significantly impact IT spending levels. Gartner envisions that generative AI will primarily be integrated into enterprises through their existing spending channels. As new features are continually added to tech products and services, organizations are likely to incorporate generative AI gradually and judiciously through upgrades that align with their IT budgets.
John-David Lovelock emphasized the importance of having a coherent AI strategy, stating, “When it comes to AI this year, organizations can thrive without having AI in production, but they cannot be without a story and a strategy.”
Looking ahead, Gartner predicts that IT spending will continue to grow, reaching 8.8 percent in 2024 and totaling an impressive $5,126.105 billion. The projected spending distribution for 2024 is as follows:
Data Center Systems: $235.53 billion (+8.1 percent)
Devices: $748.15 billion (+6.9 percent)
Software: $1,039.175 billion (+14 percent)
Enterprise Software: $1,585.373 billion (11.6 percent)
Communication Services: $1,517.877 billion (+3.8 percent)
With software remaining a significant growth driver and the anticipation of generative AI integration, the IT industry is poised for an exciting and transformative future in the years to come. Organizations are urged to develop thoughtful strategies to harness the potential of these emerging technologies and leverage their transformative capabilities for sustained growth and innovation.