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Gartner expecting strong year for software and services in 2017

Gartner has produced a forecast for IT spending next year and warned that investment in hardware will remain challenged but customers are buying software and services


Spending on software and services next year should help reverse the slowdown in IT spending that has been a feature of the Western European market over the course of 2016.

Analyst house Gartner has issued its guidance for what the next 12 months might hold with the firm anticipating the decline in spending on devices to continue but a climb in software and services investment.

That echoes the advice that many in the channel are being given to move towards a more services based business.

Brexit has also done its bit to push customers away from traditional hardware, which has gone up with price rises kicking in because of the weakness of the pound against the dollar.

"When the prices of goods increase, consumers and businesses shift their buying patterns, and the simple reaction is to buy less well-featured products," said John-David Lovelock, research vice president at Gartner.

"But now that there are viable cloud offerings in the UK, organizations are also able to shift their spending into different areas — to buy computing as a service, instead of servers. These shifts will play out further in 2017," he added.

The other buzzword that is unlikey to go out of fashion anytime soon is 'transformation' with the channel still facing a need to talk about companies changing their businesses digitally in 2017.

Western Europe IT Spending Forecast (Millions of Constant U.S. Dollars)

2016 Spending

2016 Growth (%)

2017 Spending

2017 Growth (%)

Data Center Systems

42,274

1.8

42,679

1.0

Software

91,952

5.3

97,641

6.2

Devices

113,701

-5.5

110,899

-2.5

IT Services

292,265

3.8

304,281

4.1

Communications Services

250,521

-3.1

248,021

-1.0

Overall IT

790,712

0.2

803,521

1.6

Source: Gartner (November 2016)


"Spending on digitalization is on the rise in EMEA, and we’ll witness some leading organizations modernize their core IT systems and increase spend on software and services in particular, as part of their digital transformation," said Lovelock.

There is expected to be plenty of interest in SaaS and cloud offerings with hardware spending coming i9n at a much lower rate.

As well as underlining the popularity of software and services the other headline from the latest Gartner forecasts is that IT spending in Western Europe will improve next year, improving by 1.6% on 2016.

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