Gartner is predicting a 2.4 percent growth in global IT spending in 2017 following an anaemic 0.3 percent growth rate in 2016. Investments in enterprise software and digital transformation in business are the primary driving forces behind the increase in spending, which is expected to top $3.5 trillion. Spending on enterprise applications is expected to jump 7.6 percent this year to $351 billion, CIO reports.
Digital transformation is also pushing growth in IT investment as businesses incorporate Internet of Things devices, and emerging technologies like blockchain are also receiving attention as companies look to IT to power revenue growth.
New Enterprise Software for a New IT Paradigm
John-David Lovelock, research vice president for Gartner, believes CEOs see IT not so much as supporters of business but as drivers of product and service development.
“CEOs are saying, ‘You know what, we’re going to grow,’ and they’re focused on top-line revenue growth,” Lovelock told CIO. “They think they can do that in the current economic environment by bringing new services to market — so it’s less about IT supporting business, but now enabling it.”
Investments in modern enterprise resource planning (ERP) systems are growing rapidly, as businesses transition ERP into the cloud for scale and added data analysis capabilities. Customer relationship management (CRM) software investments are also growing rapidly because of the availability of popular software-as-a-service systems and the ease of deploying those applications within cloud environments.
In addition, companies are spending big on advanced business intelligence applications; vendor revenue is up 35 percent, CIO reports. In many cases, these modern systems are implemented as complements to machine learning within the enterprise.
As companies seek to take advantage of IoT, cognitive computing and other innovations, they’re seeking outside expertise to assist with the creation and implementation of business use cases for these technologies. Large, seasoned service providers are well positioned to capitalize on digital transformation investments. Gartner predicts 3.1 percent growth in the IT services sector this year, according to CIO.
Investments in on-premises data centers, however, are expected to grow at much slower rates. Gartner predicts a 0.3 percent growth rate in data center system spending, largely lowered by reductions in on-premises enterprise storage investments.
An Exciting New Chapter
Any industry transition brings growing pains and difficult decisions; IT is no exception. As on-premises data center investments decline and businesses look to the cloud, companies may need less personnel to manage on-premises infrastructure ops and support.
At the same time, Lovelock sees IT playing an essential role in the future of business, with CIOs in a creative position to make it happen.
“CIOs are going to have to become builders again,” Lovelock told CIO. “They’re going to have to combine the existing software that’s out there with pieces that aren’t in order to provide new products and offerings built on their intellectual property.”