Thursday, 24 October 2019 11:10

Australia, NZ record increased IT spending, despite worldwide slowdown Featured

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Spending on technology products and services in Australia is forecast to total $93.7 billion this year - up 3 percent from 2018 - and to grow 4.6 percent to reach almost $98 billion in 2020, in contrast to a global slowdown in IT spending forecast by Gartner.

And New Zealand is also set for growth in IT spending with Gartner forecasting the spend to reach NZ$13.4 billion this year - up 2.3 percent from 2018 - and to grow 3.6 percent to NZ$13.9 billion in 2020.

Globally, however, IT spending has slowed in 2019 with the latest forecast from Gartner projecting an increase of just 0.4% from 2018 to a total spend of US$3.7 trillion this year.

But despite what Gartner says is the lowest forecast growth in 2019 so far, it expects global IT spending to rebound in 2020 with forecast growth of 3.7%, primarily due to enterprise software spending.

“The slowdown in IT spending in 2019 is not expected to stretch as far into 2020 despite concerns over a recession and companies cutting back on discretionary IT spending,” said John-David Lovelock, research vice president at Gartner.

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Gartner says today’s complex geopolitical environment has pushed regulatory compliance to the top of organisations’ priority list, with overall spending on security increasing 10.5% in 2019, with cloud security projected to grow 41.2% over the next five years.

“This is not just about keeping the ‘bad guys’ out,” said Lovelock. “It is also about the expanding need to be compliant with tariffs and trade policy, intellectual property rights, and even with the multiple and sometimes overlapping privacy laws.”

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And Gartner says that despite the ongoing tariff war, US IT spending is forecast to grow 3.5% in 2019, but IT spending in China is expected to grow only 0.1%.

“Tariffs do not have a direct effect on IT spending, yet,” said Lovelock. “Should tariffs extend to devices like PCs and mobile phones, we will likely see manufacturers switch supply routes to minimise costs and have their technology made outside of China.”

According to Gartner the device market will see the sharpest spending decline among all segments in 2019, down 5.3% from US$713 billion in 2018 – but the market is expected to see modest growth of 1.2% in 2020.

“Similar to how consumers have reached a threshold for upgrading to new technology and applications, technology general managers and product managers should invest only in the next generation of products that will push them closer to becoming a true technology company,” said Lovelock.

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IT spending growth, according to Gartner, is being driven by the rest of the world catching up on cloud spending – with the US. leading cloud adoption and accounting for over half of global spending on cloud.

In some cases, countries that Gartner says it tracks lag one to seven years in cloud adoption rates.

“For perspective, the country directly behind the US on cloud spending is the United Kingdom, which only spends 8% on public cloud services. An interesting outlier is China, which has the highest growth of cloud spending out of all countries. While China is closing the spending gap, it still will not reach U.S. levels by 2023,” Lovelock notes.

Gartner also predicts that organisations with a high percentage of IT spending dedicated to the cloud will become the “recognised digital leaders” in the future.

“Most companies are caught trying to either cut costs or invest for growth, but the top-performing enterprises are doing both,” says Lovelock.

“A core challenge facing the industry is how organisations can operate as both a traditional company and a technology company at the same time. These ‘and’ dilemmas will drive future IT spending trends.”

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Peter Dinham

Peter Dinham is a co-founder of iTWire and a 35-year veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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