Tuesday, 25 October 2016 20:13

Australian IT spending to hit $85b in 2017: Gartner

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Australian IT spending to hit $85b in 2017: Gartner Image courtesy of Stuart Miles at FreeDigitalPhotos.net

Growth in the software and IT services market is driving up IT spending in Australia to a forecast total spend of almost $85 billion in 2017 on the back of organisations undertaking major digital platform transformations.

According to Gartner, the forecast figure of $85 billion (A$) represents a 2.8% increase in spending from this year.

Gartner revealed the forecasts for the Australian market at its Symposium/IT Expo on the Gold Coast on Tuesday, while reporting that global IT spending, also driven by growth in software and IT services revenue, is forecast to reach US$3.5 trillion in 2017, up 2.9%  from 2016 estimated spending of $3.4 trillion.

In the Asia Pacific region, software spending is projected to grow 6.4% in 2016, and another 10.2% in 2017 to total US$35.6 billion.

And, Gartner says APAC IT services spending is on pace to grow 2.9% in 2016 to reach US$93 billion, and increase 4.1% in 2017 to reach US$98.8 billion.

Asia/Pacific IT Spending Forecast (Billions of U.S. Dollars)

  2016 Spending 2016 Growth (%) 2017 Spending 2017 Growth (%)
Data Centre Systems 36,157 4.1% 37,863 4.7%
Software 35,692 6.4% 39,344 10.2%
Devices 204,989 -7.4% 210,884 2.9%
IT Services 93,216 2.9% 98,809 6.0%
Communications Services 350,234 0.0% 364,716 4.1%
Overall IT 720,288 -1.4% 751,617 4.3%

Source: Gartner (October 2016)

Peter Sondergaard, senior vice-president and global head of research at Gartner, told his Gold Coast audience that every organisation needs a digital platform strategy.

“The battle for ownership of digital platforms, where networks of stakeholders bring value to each other, has begun,” Sondergaard said.

“The good news is that there’s incredible opportunities for those companies that innovate, lead and ultimately succeed in the creation of new digital platforms that meet their customer’s needs better than their competitors. The bad news for those hearing about this seismic shift for the first time is, basically, you’re already a long way behind.

“Not every organisation should assume a leadership role in a business ecosystem; however, chief information officers must collaborate with their business counterparts to integrate digital platform development into their technology and business strategic planning.

“CIOs will participate in the building of a new digital platform with intelligence at the centre, That platform will enable ecosystems, connecting businesses and collapsing industries. It will change society itself, and the way people live.”

Sondergaard says this new digital platform that extends beyond traditional IT infrastructure using new technologies is not familiar to the typical IT department.

“Your new digital platform will allow you to participate in the evolving world of business, government, and consumer ecosystems because ecosystems are the next evolution for digital. It’s how you compete at scale.”

Sondergaard says the new digital platform consists of five domains – traditional IT systems, customer experience, the Internet of Things, intelligence and the ecosystem foundation.

“Each of these domains are interconnected and interdependent. All have a role, and all are required."

With the US presidential election two weeks away, Gartner’s John-Davie Lovelock said the firm’s analysts did not believe it, or who won, would affect IT spending trends.

“We have also taken into account the US presidential race, as well as a potential rate cut by the Federal Reserve. Typically, there is a slight pause in IT spending leading into the election, and then a relief in spending, subsequently.

“However, trends have shown that IT spending in the US is not dependent on presidential leadership, so neither candidate should have a significant impact on IT spending in the near-term.”

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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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