Gartner: Cloud Fuels Enterprise Software Spending Surge

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Brexit and US-China trade tensions pose less of a threat than skills shortages, as businesses buy into the cloud and the Internet of Things

Analyst firm Gartner said it expects IT spending to grow 3.2 percent to $3.76 trillion (£2.86tn) this year, in spite of unpredictable factors such as the UK’s exit from the European Union and an intensifying trade conflict between the US and China.

All sectors of the tech industry are expected to see increased spending, but Gartner sees enterprise software growing the most quickly, up 8.5 percent to $431bn, with a further 8.2 percent increase expected in 2020.

Spending in the sector is largely fuelled by enterprises shifting to cloud-based software.

Gartner expects spending on IT services to rise 4.7 percent to $1.03tn and sees data centre spending up by 4.2 percent to $210bn, with devices up by 1.6 eprcent to $679bn and communications services rising by 1.3 percent to $1.417tn.

Budget shift

And while spending is growing across the board, Gartner sees budgets shifting away from saturated areas such as mobile phones, PCs and on-premises data centre infrastructure to cloud services and Internet of Things connected devices.

“IoT devices, in particular, are starting to pick up the slack from devices,” Lovelock said. “Where the devices segment is saturated, IoT is not.”

That expansion comes amidst a broader shift that is seeing IT become more central to businesses, Gartner said.

“IT is no longer just a platform that enables organisations to run their business,” said research vice president John Lovelock in a research note.  “It is becoming the engine that moves the business.”

He said Gartner sees IT becoming “the thing that binds the business together”.

Skills crisis

But for IT to continue to grow, businesses need to address concerns such as a skills shortage in areas such as artificial intelligence, machine learning, API and services platform design and data science, Lovelock said.

The adoption of new technologies, such as IoT devices, are accentuating the skills crisis, he said.

“Nearly half of the IT workforce is in urgent need of developing skills or competencies to support their digital business initiatives,” Lovelock said.

Gartner said IT spending worldwide hit $3.650tn last year.

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