Technology spending to grow 3.2% in 2017: Forrester

Tech spending in 2017
Market research agency Forrester has revealed technology spending in 2017 and 2018 by enterprises and governments globally.

The annual spending on technology goods and services by businesses and governments will grow 3.2 percent in 2017 and 3.9 percent in 2018.

“Slower growth is expected due to the adoption of new technologies, as well as political uncertainties that emerged in 2016,” said Forrester.

ALSO READ: The Global Tech Market Outlook For 2016 To 2017 by Forrester

The largest tech market is in the US.

China has the third largest tech market.

Both China and the US will grow faster than the global growth rate.

India’s tech market is too small as compared with China and the U.S. However, India’s tech market will grow the fastest in 2017.

The tech market growth in the U.S. will be giving positive signals to the global markets.

Tech growth drivers in US

# Solid economic growth, high rate of cloud adoption, with subscription spending representing a majority of total spending in CRM, human resources management, and other applications

# A willingness to experiment with new technologies like mobile, big data, and cognitive computing.
Tech spending in India and China
India’s tech spending growth will be more than 8 percent in 2017. Tech spending growth in India is due to economic growth. India’s tech market growth is primarily coming from the private sector and results from the efforts of Indian firms to modernize their operations.

China’s growth in tech spending will be almost 7 percent.

China’s growth reflects some adoption of cloud technologies and the investments by public sector.

CIOs and their business partners will increase their new project spending on business technologies that help their firms win, serve, and retain customers in the US and other advanced European, Asian, and North American economies.

Business technology spending will occupy 54 percent of total new project spending.

Spending on business technology will be about 27 percent of total tech spending in 2017 and 2018.

Traditional IT spending on hardware, telecom services, and tech outsourcing — apart from cloud platform services — will languish.

Softwareas-a-service (SaaS) applications and cloud platform services will continue to spread in 2017 and 2018 from the US to Europe, Asia, and Latin America.

In some categories, cloud is depressing growth as the drop in spending on licensed software and on-premises hardware offsets the rise in cloud spending.

In CRM, ePurchasing, and other apps, high rates of cloud adoption are causing double-digit growth.

Analytics in the form of business intelligence (BI), cognitive solutions, and embedded analytics will be a second driver of software growth, though BI’s slow transition to SaaS will hold down the increase.

Artificial intelligence and machine learning will not show up in meaningful numbers in tech spending until after 2018. This will be a bad development for companies such as Intel, IBM, etc.

Software at $634 billion will be the largest component of Forrester’s prediction on tech spending in 2017. Software spending will overtake telecom services spending, the second-largest category of global tech spending, at $602 billion.

Increased spending on BT applications and SaaS applications generally has been the main driver of software growth. Tech consulting and systems integration services ($573 billion) will be the third-largest category, followed by tech outsourcing ($503 billion), which includes computer hardware support services ($51 billion) and infrastructure-as-a-service ($44 billion).

Computer equipment and communications equipment will constitute the smallest shares of 2017 spending. In the computer equipment market ($369 billion), PCs and servers will continue to have the largest shares.

Close to 60 percent of the spending in the $332 billion communications equipment market will consist of network gear purchases by telecommunications services vendors ($195 billion), with the remaining share comprising expenditures by businesses and government for their own needs ($137 billion).