Consultant Gartner predicts that enterprise spending on technology in 2022 will grow by 3% to $4.5 trillion, according to its latest forecast for IT.
In terms of IT spending by financial institutions, the Gartner Research Centre released a forecast focused on this industry that estimates spending will grow by an above-average 6.1% to $623 billion globally by 2022. IT services, which include consulting and managed services, account for 42% of total technology spending in the sector at $264 billion. Software, on the other hand, is the fastest growing category, with spending expected to increase by 11.5 per cent to $149 billion.
Despite these astronomical figures and the consolidation of the uptrend seen in recent periods, there is some slowdown in investment. According to John-David Lovelock, distinguished research vice president at Gartner, “it will be at a much slower pace than 2021 due to spending cutbacks on PCs, tablets and printers by consumers, causing spending on devices to shrink 5%”.
The reasons behind this trend are high inflation and interest rate hikes. This current economic uncertainty is not only affecting IT spending, it is also changing business consumption patterns. As John-David Lovelock explains, “price increases and delivery uncertainty, exacerbated by the Russian invasion of Ukraine, have accelerated the transition in purchasing preference among CIOs, and enterprises in general, from ownership to service, pushing cloud spending to 18.4% growth in 2021 and expected growth of 22.1% in 2022”.
Towards a service-based model, according to Gartner Research Centre
This paradigm shift in businesses away from an IT ownership model to a services-based model is driving investment in data centres and cloud computing. According to the Gartner Research Centre, “not only is demand for cloud services reshaping the IT services industry, but it is also driving server spending up to 16.6% growth by 2022 as hyperscalers build out their data centres”. They add, “Cloud consulting and implementation and cloud managed services are expected to grow 17.2% in 2022, from $217bn in 2021 to $255bn in 2022, which will help drive the overall IT services segment to 6.2% growth in 2022.”
This growth in spending is driven by the increased costs often associated with investing in cloud computing and the migration process from legacy on-premises platforms. In addition, as Gartner research vice president Sid Nag points out, “cloud-native capabilities, such as containerisation, database platform as a service (dbPaaS) and artificial intelligence/machine learning, contain richer features than commoditised computing, such as IaaS or Network-as-a-Service (NaaS). As a result, they are generally more expensive, which is fuelling the growth in spending.”
However, as John-David Lovelock recommends, taking on these costs should not scare companies considering the advantages of a cloud platform, as long as this technology is implemented with all the necessary safeguards. Early cloud adoption will mean a clear competitive advantage in the future, a key to survival: “Organisations that do not invest in the short term, will likely fall behind in the medium term, and risk not being around in the long term.”