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Political climate chills IT spending forecast

Some organisations are likely to adopt a wait-and-see approach to IT investments in 2017, but others will use political uncertainty as a driver for business change

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Political upheaval and Brexit are forcing many businesses to adopt a wait-and-see strategy to IT investments, but some organisations are capitalising on the uncertainty, according to Gartner research vice-president John-David Lovelock.

“In this period of massive uncertainty, some people are retreating and adopting a wait-and-see approach, but others see this as an opportunity to grow,” he said.

What this means, according to Lovelock, is that CIOs are unable to get a clear indication of where their IT spending sits by benchmarking their budgets against the average IT spending forecast – since some organisations will be investing more, while others will invest less.

CIOs who have chosen to wait may face significant price hikes in the cost of hardware due to currency devaluation.

“2017 was poised to be a rebound year in IT spending. Some major trends have converged, including cloud, blockchain, digital business and artificial intelligence. Normally, this would have pushed IT spending much higher than 2.7% growth,” said Lovelock.

“However, some of the political uncertainty in global markets has spurred a wait-and-see approach, causing many enterprises to forestall IT investments.”

Gartner’s latest IT spending forecast has projected flat growth in devices spending – such as PCs, tablets, ultramobiles and mobile phones – during 2017 at $589.

A replacement cycle in the PC market and strong pricing and functionality of premium ultramobiles will help drive growth in 2018, the analyst company noted.

Isabelle Durand, principal research analyst at Gartner, said PC shipments in business grew, led by Microsoft Windows 10 deployments, which occurred in the fourth quarter.

“Our 2016 enterprise survey also confirms the uptake in Windows 10 installations. It found that one in three businesses in western Europe have started their Windows 10 deployments,” said Durand.

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In the UK, the effect of the Brexit negotiations and the devaluation of the pound sterling have not yet had any major detrimental impact on PC shipments.

However, Durand said: “PC prices in the UK will increase by up to 10% in 2017, due to the devaluation of currency caused by the Brexit vote.”

Globally, datacentre spending shrunk 0.6% in 2016 to $170 bn, but it is expected to rise this year by 2.6% to $175bn, according to Gartner’s 2017 forecast.

Gartner said the aggressive build-out of cloud computing platforms by companies such as Microsoft, Google and Amazon is pushing the global server forecast to reach 5.6% growth in 2017. This was revised up 3% from last quarter’s forecast.

“Part of the reason that we have a retraction in datacentre spending is that there are now alternatives available as a service. This means certain areas of datacentre spending is decreasing while other areas of spending is increasing,”said  Lovelock.

The worldwide IT services market is forecast to grow 4.2% in 2017. Buyer investments in digital business, intelligent automation, services optimisation and innovation continue to drive growth in the market, but buyer caution, fuelled by broad economic challenges, remains a counter-balance to faster growth, the analyst company noted.

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