UPDATED 21:33 EDT / JANUARY 12 2017

INFRA

The Trump effect: Political uncertainty trims Gartner’s 2017 IT spending forecast

Gartner Inc. is blaming political uncertainty for a rather modest forecast of 2.7 percent growth in global information technology spending this year.

The research firm’s latest Worldwide IT Spending Forecast, which predicts spending of $3.46 trillion in 2017, says the growth will be driven by cloud infrastructure spending and emerging technologies such as artificial intelligence and blockchain.

However, Gartner also warns that “political uncertainty in global markets has fostered a wait-and-see approach” that will stall more IT investment by many businesses. That’s a reference in part to uncertainty around President-elect Trump’s impact on the U.S. economy, in particular potential protectionist policies, said Gartner spokesman Robert van der Meulen. Additional factors included last year’s Brexit vote in the United Kingdom and coming elections across Europe, where anti-European Union parties are gaining in popularity.

“2017 was poised to be a rebound year in IT spending,” Gartner Research Vice President John-David Lovelock said in a statement. “Some major trends have converged, including cloud, blockchain, digital business and artificial intelligence. Normally, this would have pushed IT spending much higher than 2.7 percent growth.”

Instead, the uncertainty has created a “division between individuals and corporations that will spend more—due to opportunities arising—and those that will retract or pause IT spending.”

The biggest of those “opportunities arising” is the aggressive buildout of infrastructure by companies such as Amazon Web Services, Google Inc. and Microsoft Corp., which are all busy trying to differentiate their services in the heated public cloud business. This activity is set to cause worldwide server sales to grow by 5.6 percent in 2017.

Indeed, Gartner said the rush by cloud vendors to build out their infrastructure has forced it to revise its global server forecast upward by a hefty 3 percent over the previous quarter. What this means is that strong global sales of servers will offset declines in other key market segments, such as controller-based storage. In total, Gartner predicts data center spending to rise by about 2.6 percent in 2017, following a 0.6 percent decline in 2016.

Another growth opportunity lies in the enterprise software market, particularly around application containers and other open-source software such as OpenStack. Gartner reckons that enterprise software investment will actually be the fastest-growing segment in IT this year at 6.8 percent, topping $355 billion in total spend. It adds that this rate of growth should also continue through 2018.

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That finding jibes with a forecast from 451 Research LLC published earlier this week, which predicts the application container market to grow at a 40 percent compound annual growth rate to $2.7 billion by the end of 2020. In the same report, 451 Research also said it expects OpenStack deployments to grow at a 35 percent compound annual growth rate, to $5.8 billion by 2020.

Those segments make up just a small fraction of the overall enterprise software market as Gartner sees it, but they’re clearly also among the fastest-growing as enterprises race to embrace cloud-native, distributed applications and other agile microservices.

Looking ahead, Gartner also provided a tentative prediction for 2018’s global IT spend, saying it could grow as high as $3.55 trillion. That would be more or less the same growth rate that’s projected for 2017, suggesting that both the political uncertainty and the rapid innovation seen in areas like cloud infrastructure and enterprise software will continue for some time to come.

Photo Credit: bleepinghost Flickr via Compfight cc

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