UPDATED 13:59 EDT / JULY 14 2021

CLOUD

Gartner sees strong bounceback in global tech spending led by cloud and devices

Worldwide information technology spending is projected to total $4.2 trillion in 2021, up of 8.6% from 2020, according to a new forecast today by Gartner Inc.

After a trough amid the pandemic-related slowdown in 2020, when spending grew just 0.9%, investments are accelerating ahead of anticipated revenue growth despite the current sluggishness. Business leaders are more willing to invest in technology that has a clear link to business outcomes, such as improved agility enabled by cloud platforms, Gartner said.

That’s why the IT services segment is among the top three highest growth areas for 2021, primarily owing to increased infrastructure-as-a-service spending that supports mission-critical workloads and avoids high on-premises costs. The IT services segment is forecast to total $1.2 trillion in 2021, an increase of 9.8% from 2020.

That’s well below the 18% growth in cloud-related spending that Gartner forecast last November, but the services category is much bigger than just cloud, noted John-David Lovelock, a Gartner distinguished research vice president. “Hardware support is in decline from 2019 through 2025 and the $323 billion infrastructure implementation and managed services market, which is the largest segment in 2021, struggles for growth,” he said.

A few trends stand out. One is that Gartner expects spending on data center systems to jump 7.4% this year and 5.2% next year, challenging the conventional wisdom that data centers are in decline. Lovelock pointed out that enterprise data centers are, in fact, disappearing, with spending having dropped from 59% of total server revenues in 2019 to an estimated 43% in 2025. Strong server demand by service and cloud providers is more than offsetting the fall in enterprise spending, while price increases on semiconductors among a global shortage has also driven up server costs.

The enterprise software market looks strong for the foreseeable future, with growth driven almost entirely by software as a service, Lovelock said. “The traditional licensed/on-prem software market is down in 2021 and flat through 2025,” he said.

Also notable is Gartner’s forecast that devices, including phones and printers, will jump nearly 14% this year but drop back to less than 1% growth in 2022. Lovelock said that’s a natural replenishment cycle. “Remote work and education caused a refresh cycle for PCs, laptops and tablets in 2020 and for mobile phones this year,” he said. “The growth does come out of the market next year, but it maintains the new higher levels of spending of over $750 billion a year.”

Gartner worldwide IT spending forecast (in millions of U.S. dollars)

2020  % Growth   2021  % Growth   2022 % Growth 
Data Center Systems 178,466 2.5 191,648 7.4 201,659 5.2
Enterprise Software 529,028 9.1 598,957 13.2 669,114 11.7
Devices 696,990 -1.5 793,973 13.9 800,172 0.8
IT Services 1,071,281 1.7 1,176,676 9.8 1,277,228 8.5
Communications Services 1,396,287 -1.4 1,444,980 3.5 1,481,878 2.6
Overall IT 3,872,052   0.9 4,206,234   8.6 4,430,051   5.3
Photo: Unsplash

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