UPDATED 20:07 EDT / APRIL 07 2021

POLICY

Gartner: Digital transformation will drive even more tech spending

Enterprise executives will spend big on digital transformation this year, and that will help to drive overall global information technology spending by 8.4%, to $4.1 trillion, by the end of 2021.

That’s according to a new update from research firm Gartner Inc. of its first prediction in January that IT spending would hit $3.9 trillion this year as the COVID-19 pandemic continues to act as a catalyst for digital transformation in just about every major industry. Global spending on technology had contracted by 2.2% in 2020 because of pandemic-related cutbacks.

Gartner said the main growth driver is funds for new digital business initiatives from business departments outside traditional IT departments that will be charged as a cost of revenue or cost of goods sold.

The analyst firm said all of the major IT spending segments will see positive growth this year, with device spending rising by 14% and enterprise software by 10.8%. That’s because organizations are now focused on providing more comfortable, innovative and productive remote working environments for their staff, Gartner said.

John-David Lovelock, Gartner’s distinguished research vice president, said IT is no longer just about supporting corporate operations. Instead, it is now “fully participating in business value delivery,” he said.

“Not only does this shift IT from a back-office role to the front of business, but it also changes the source of funding from an overhead expense that is maintained, monitored and sometimes cut, to the thing that drives revenue,” Lovelock added.

Gartner said an increased focus on employee experiences and well-being are driving investments in areas such as social software and collaboration platforms and human capital management software. In addition, chief information officers at large enterprises are focused on completing their digital business plans aimed at enhancing value propositions.

“Last year, IT spending took the form of a ‘knee jerk’ reaction to enable a remote workforce in a matter of weeks,” Lovelock explained. “As hybrid work takes hold, CIOs will focus on spending that enables innovation, not just task completion.”

The forecast also shows that the post-pandemic economic recovery will vary significantly across countries, vertical industries and IT segments. Gartner said it expects the banking, insurance and securities industries’ spending will more closely resemble that of pre-pandemic levels. In contrast, the retail and transportation industries won’t see normality until closer to 2023, Gartner said.

North America and Western Europe, where vaccine rollouts are progressing faster, will both see their economies return to normality by the end of 2021, Gartner said. But Latin America won’t see the same recovery until 2024. China, meanwhile, has already recovered and its IT spending has now surpassed 2019 levels, Gartner said.

Photo: Goumbik/Pixabay

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