UPDATED 00:11 EDT / OCTOBER 26 2016

NEWS

Forrester: U.S. tech spending to grow 5.1 percent in 2017

Forrester Research Inc. has offered up a rather optimistic forecast on tech spending in the U.S., saying it will increase by 5.1 percent to $1.51 trillion in 2017.

The forecast comes just a week after Gartner Inc. published its own report on global IT spending, which predicted more tepid worldwide growth of just 2.9 percent. However, Forrester’s prediction comes with a slight caveat: It assumes that whoever wins the U.S. presidential election will continue the economic policies instituted by the current Obama Administration and Republican-controlled Congress.

In a blog post, Forrester Vice President and Principal Analyst Andrew Bartels said three forces are expected to drive technology spending in the next 12 months. The first is a general improvement in the U.S. economy, with rising wages and household incomes, low energy costs and reduced unemployment all expected to help drive growth next year.

“The combination of these forces is keeping U.S. real GDP growth in the 1.5 percent to 2.5 percent range; inflation in the 1 percent to 2 percent range, and nominal GDP around 4 percent, setting a floor under U.S. tech spending growth,” Bartels wrote.

In turn, this will help to drive increased spending on business technology (BT technology) and traditional information technology, the analyst predicted. He said that American C-suites and line of business executives will increase their spend on technology in order to drive customer acquisition and retention. BT technology spending in particular will see substantial growth of 9.8 percent, to $501 billion, while IT spending will grow by 3 percent.

“Customer relationship management, eCommerce, marketing automation, customer service systems, and customer-related analytics will see growth of 10 percent or more, as will the related consulting and systems integration services,” Bartels said, adding that spending will increase on back-office systems such as document management automation and HR management platforms as a way to decrease overall costs by streamlining core operations.

Finally, Bartels said that the cloud will continue to cannibalize on-premises technology. He predicts that spending on SaaS and other cloud platforms will rise by 25 percent or more, though this will be offset by reduced spending on on-premises hardware and software.

Industries such as high-tech, transportation and construction are expected to see the biggest growth in technology spending, while the chemicals and oil and gas industries will likely see IT budgets reduced in the next year.


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