- SMB Spotlight
Global IT spending for the past quarter is predicted to be down from 3.2 percent in the previous quarter to 2.1 percent, according to Gartner. In fact, spending is likely to remain flat in the near future until the rise of digital business takes effect, the analyst said.
Gartner's latest Worldwide IT Spending Forecast shows that IT spending remains flat, despite greater optimism that the economy is on the up in many regions. In part, this can be explained by price cutting in some arenas such as cloud services, while in other areas, lack of product differentiation is driving down the amount customers spend.
Gartner research vice president Richard Gordon told V3: "We're seeing, slightly faster than expected, a kind of commoditisation around IT, if you like, where there is more competition among the vendors, and there is a shift in buying power towards the buyers in areas like cloud-based products and services.
"There's a bit of a lack of differentiation if you look around at products, especially something simple like a smartphone. They're becoming much of a muchness, so there's also more of a competition around price here, and that's shifting pricing down, so a fall in spending isn't due to a lack of demand," he added.
Furthermore, Gartner predicts that this trend is likely to continue for the next few years, until we start to see spending rise back to previous levels with the emergence of what the firm refers to as digital business, which is expected to start to take effect in the period 2015 through 2018.
"IT has evolved over time from automation to an era where there has been a bit more sophistication about managing IT and sourcing, and we think we're now moving to a new era of digital business, which is more about the embedding of technology in products and services themselves, such as with the Internet of Things, which is going to stimulate a different type of technology investment going forwards," Gordon said.
Highlights of Gartner's report include a trend for the server market to show weakness as organisations migrate away from high-cost platforms towards lower-cost alternatives.
In the enterprise software market, database software is expected to have strong growth as adoption is driven by big data and digitalisation initiatives.
In Europe, the situation is particularly pronounced, with Western Europe showing a growth rate of -0.8 percent in overall spending, according to Gartner.
"Western Europe is still lagging behind other regions in the world, even lower than Japan, which has long been a low-growth economy," Gordon said. However, things may not be as bad as the bare figures may suggest, he added.
"If you look at the digital economy, it's not so much the technology itself, it's the economic value of the thing that it impacts. If you can make something like healthcare much more efficient through the use of technology, then you can strip a lot of the cost out, which is of huge economic value that doesn't necessarily show up in these spending figures," he said.