The spending will also drop due to decline in other segments too, such as enterprise software, IT services and communication services
The global IT spending is expected to total USD 3.4 trillion in 2020, a decline of 8% from 2019, according to Gartner. This drop will mainly be because of a significant drop in devices spend (15.5% from the previous year) and data center systems spend (9.7% from the previous year).
Besides the massive drops in devices and data center spends, other segments like enterprise software (6.9% from the previous year), IT services (7.7% from the previous year) and communication services (4.5% from the previous year) will also witness decline in spending, leading to drop in the overall IT spending. (see Table below)
Table: Global IT Spending Forecast (Billions of USD)
However, as the COVID-19 pandemic continues to spur remote working, sub segments such as public cloud services (which falls into multiple categories) will be a bright spot in the forecast, growing 19% in 2020. Cloud-based telephony and messaging and cloud-based conferencing will also see high levels of spending growing 8.9% and 24.3%, respectively. This is mainly because CIOs are now prioritizing spending on technology and services that are deemed “mission-critical” over initiatives aimed at growth or transformation. The COVID-19 pandemic and the effects of the global economic recession are leading to this changing CIOs’ priorities.
“CIOs have moved into emergency cost optimization which means that investments will be minimized and prioritized on operations that keep the business running, which will be the top priority for most organizations through 2020,” said John-David Lovelock, distinguished research vice president at Gartner. “Recovery will not follow previous patterns as the forces behind this recession will create both supply side and demand side shocks as the public health, social and commercial restrictions begin to lessen.”
“In 2020, some longer-term cloud-based transformational projects may be put on hiatus, but the overall cloud spending levels Gartner was projecting for 2023 and 2024 will now be showing up as early as 2022,” said Lovelock.
“IT spending recovery will be slow through 2020, with the hardest hit industries, such as entertainment, air transport and heavy industry, taking over three years to come back to 2019 IT spending levels,” said Lovelock. “Recovery requires a change in mindset for most organizations. There is no bouncing back. There needs to be a reset focused on moving forward.”