If you're thinking of lowering your company's IT spending this year, then you might be in the minority. Worldwide IT spending is projected to total $3.7 trillion in 2018, which is an increase of 4.5 percent from 2017 according to a Gartner Research forecast. "2017 turned out to be the best year for IT spending we've seen since 2007," said John Lovelock, Gartner's Chief Forecaster and author of the projection. "It's been astounding. Every country in the world grew. It sets a new plateau level."
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Much of this growth has to do with the switch from licensed software to cloud-based solutions. Spending in the enterprise software category is projected to grow more than any other category in the report. The segment, which includes all Software-as-a-Service (SaaS)-based tools, including customer relationship management (CRM), helpdesk, and human resources (HR) management tools is expected to grow 9.5 percent in 2018 to $389 billion. Plus, it's expected to grow another 8.4 percent in 2019 to total $421 billion. However, not all enterprise software spending represents new IT dollars.
"Enterprise software is really benefiting from cloud ," said Lovelock. "Many of the software segments we track have hit their peak for licensed software revenue. But more important to the issue is, when I buy SaaS [solutions], I'm not buying other pieces of the infrastructure [servers and office space to name a few]. So that's not so much an overall change in spending as much as it is redistribution."
Success with previous enterprise software integrations will drive new adoption and spending across many subcategories, such as financial management systems (FMS), human capital management (HCM), and analytic applications, Lovelock writes in the report.
"There's definitely experimenting," Lovelock said. "Most companies are in some form of cost optimization. This is in order to redistribute spending to support the next initiative: digital business. It's creating those new pieces of technology to move the business forward."
Gartner forecasts $2.9 trillion in new business value opportunities attributable to AI by 2021, according to previous Gartner projections. In fact, Gartner believes AI will create 2.3 million jobs in 2020, while eliminating 1.8 million. Your industry will determine how badly employees are hit. Manufacturing jobs bear the brunt of the job losses, while healthcare, the public sector, and education actually see job creation as a result of AI. By 2025 Gartner believes AI will deliver 2 million more new jobs than it replaces. In addition to Ai investments, Gartner is predicting big things for AI's functionality. A recent Gartner projection estimated that by 2022, personal devices will know more about a person's emotional state than that person's own family. For business-to-business (B2B) tech, the possibilities are endless. Imagine being able to predict a customer's mood before he or she ever speaks to a customer service rep. What if CRM software could predict a prospect's likelihood to buy before a sales rep makes a pitch?
"AI is a very hot topic in the media," said Lovelock. "The public has glommed onto the idea that AI is about replacing people and jobs. The real value is in augmentation. It may be possible to create a device that replaces a low-end worker, but the value isn't there immediately. There is immediate value in augmenting a person's decision-making."
Blockchain also represents future potential for business value. Lovelock projects also represents future potential for business value. Blockchain will provide $3.2 trillion in business value by 2030, Gartner projects, but as for today, Lovelock described the public's idealization of the technology as "irrational exuberance."
"We're in a phase where it seems to everyone that somebody will announce a blockchain that will solve every problem the human race has," Lovelock joked. "It's certainly a great technology but it's not going to be the solution for everything. For 2018 we see really nominal business value. We see some great growth [in spending] happening by 2020, but that's really an indication of how small the market is right now."
The devices segment is expected to grow 5.6 percent to $704 billion in 2018, its second consecutive year of annual growth after two year of decline. Device payments are driven mostly by mobile technology, including a 9.1 percent increase of iOS shipments, while PC growth will remain flat during the year, despite continued Windows 10 migration.
IT Services represents the second-largest category in the report, generating $985 billion in spending in 2018, a 4.3 percent increase over last year's spending, according to Gartner projections. Gartner defines IT services as the application of business and technical expertise to enable organizations in the creation, management, and optimization of or access to information and business processes. This includes business process, application, and infrastructure outsourcing.
"Businesses will continue to invest in IT as they anticipate revenue growth, but their spending patterns will shift," Lovelock writes in the report. "Projects in digital business, blockchain , Internet of Things, and progression from big data to algorithms to machine learning to AI will continue to be main drivers of growth."
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