Who will be spending on IT this year as CIOs look for some cut

The latest Gartner report said IT spending is forecast to grow 1.1 percent in 2019 to $3,790 billion and increase 3.6 percent in 2020 to $3,925 billion.
Gartner forecast on IT spending in 2019
The report indicates that Data center spending will dip 2.8 percent in 2019 to $204 billion and grow 1.7 percent in 2020 to $207 billion.

The data center systems segment will experience the largest decline in 2019 with a decrease of 2.8 percent. This is due to lower average selling prices (ASPs) in the server market driven by adjustments in the pattern of expected component costs.

Spending on communications will dip 0.1 percent in 2019 to $1,487 billion and increase 1.7 percent to $1,513 billion.

Spending on IT services will grow at 3.5 percent in 2019 to $1,016 billion and increase 4.8 percent in 2020 to $1,065 billion.

Spending on enterprise software will increase 7.1 percent in 2019 to $427 billion and grow 8.2 percent in 2020 to $462 billion.

Spending on devices such as laptops, smartphones, PCs, etc. will drop 1.9 percent in 2019 to $655 billion and increase 3.5 percent in 2020 to $677 billion.

CIOs on IT budgets

The new Gartner report on CIOs said CIOs must showcase that they have evidence of a strategy of cost optimization to communicate their IT cost optimization vision and strategy to non-IT decision makers.

Step No. 1: Establish a baseline

CIOs should establish a baseline for the IT organization. CIOs should work with the CFO and CEO and decide where IT needs to effectively allocate resources to initiatives that will show the best value for the organization. CIOs need data in order to base a strategic advantage or disadvantage of IT investment.

Step No. 2: Identify opportunities

CIOs should split the organization’s IT spending and costs to a granular level and compare the data points to companies within the vertical industry for valuable insights. Operational expenses much higher than the industry average means that there could be room for cost optimization. Low spending for functions such as the IT service desk mean that cuts in this area might impact service quality.

Step No. 3: Establish governance

The most important task for CIOs is to manage all ideas proactively via a cost optimization government team and evaluate the potential.

Some ideas might result in modest savings, because they only reduce IT costs, while others will impact business spending and revenue.

Step No. 4: Start with quick wins

CIOs should team up with a trusted business-unit leader, communicate expectations for what is to be accomplished and explain how IT can support the goals of the business unit. The best way to ensure organizational buy-in for a proactive cost optimization strategy is to showcase a portfolio of projects or changes that achieve immediate cash savings without costing anything or are cash-positive without requiring much spending.

Gartner Senior Director Analyst James Anderson at Gartner Symposium/ITxpo in Dubai, said: “The portfolio is very important. It clearly showcases the vision and strategy of the CIO regarding cost reduction and its results within the business.”

“The choices CIOs make about technology investments are essential to the success of digital business. Disruptive emerging technologies, such as artificial intelligence (AI), will reshape business models as well as the economics of public- and private-sector enterprises,” said John-David Lovelock, research vice president at Gartner.

Rajani Baburajan

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