Worldwide IT spending is projected to total $4.6 trillion in 2023, an increase of 5.1% from 2022, according to the latest forecast by Gartner. Demand for IT in 2023 is expected to be strong as businesses push forward with digital business initiatives in response to economic turmoil.
“Enterprise IT spending is recession-proof as CEOs and CFOs, rather than cutting IT budgets, are increasing spending on digital business initiatives,” said John-David Lovelock, Distinguished VP Analyst at Gartner. “Economic turbulence will change the context for technology investments, increasing spending in some areas and accelerating declines in others, but it is not projected to materially impact the overall level of enterprise technology spending.”
“However, inflation has cut into consumer purchasing power in almost every country around the world. Consumer purchasing power has been reduced to the point that many consumers are now deferring 2022 device purchases until 2023, driving spending on devices down 8.4% in 2022 and 0.6% in 2023.”
The technologies that are being maintained versus those that are driving the business are evident by their projected growth rates in 2023. There is sufficient spending within data centre markets to maintain existing on-premises data centres, but new spending continues to shift to cloud options, as evidenced by the 11.3% projected growth for software spending in 2023.
In a down or deteriorating economy, conventional wisdom calls for reducing costs, including IT costs. However, a July 2022 Gartner survey of more than 200 CFOs found that 69% plan to increase their spend on digital technologies, while the 2023 Gartner CIO and Technology Executive Survey found that CIOs are being tasked with accelerating time to value on digital investments.
“Companies will use digital technology primarily to reshape their revenue stream, adding new products and services, changing the cash flow of existing products and services, as well as changing the value proposition of existing products and services,” said Lovelock. “This trend has fed the shift from buying technology to building, composing and assembling technology to meet specific business drivers. This shift is foundational to the growth of cloud over on-premises for new IT spending.
“However, as organisations look to also realise operations efficiency, cost reductions and/or cost avoidance during the current economic uncertainty, more traditional back-office and operational needs of departments outside IT are being added to the digital transformation project list.”