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Australia’s IT spending set to bounce back in 2021
IT spending in Australia will grow by 4% this year, reversing a decline of 1% in 2020 as organisations seek to grow their digital chops
Enterprise IT spending across all industry sectors in Australia will grow 4% to reach more than A$98bn in 2021, following a 1% decline in 2020, according to the latest industry forecast by Gartner.
In an earlier October 2020 forecast, Gartner said utilities, government, education and healthcare have proven to be the most resilient in technology spending in Australia. Transportation, manufacturing and natural resources have been the hardest hit.
Kristian Steenstrup, distinguished research vice-president at Gartner, said at the time that Covid-19 response is different in the resources and manufacturing industry from other industries because it is not always physically possible to shut down a site.
“These companies are in the top three sectors for technology spending in Australia, but as they are designed for continuous operation they simply can’t respond to external factors as quickly as a retailer, for example,” said Steenstrup.
“The physical nature of asset intensive industries makes it harder for employees to work from home. Looking ahead, we’re seeing strong interest from CIOs in technologies such as proximity tracking to enable fast response to outbreaks and in the longer term, remote monitoring and control of equipment,” he added.
Globally, IT spending is projected to reach $3.9tn in 2021, an increase of 6.2% from 2020. According to Gartner, worldwide IT spending fell 3.2% in 2020 as CIOs prioritised spending on technology and services that were deemed “mission-critical” during the initial stages of the pandemic.
John-David Lovelock, distinguished research vice-president at Gartner, noted that CIOs have to balance between saving cash and expanding IT, and that digital business, led by projects with a short time-to-value, will get more money and board level attention in 2021.
“With the economy returning to a level of certainty, companies are investing in IT in a manner consistent with their expectations for growth, not their current revenue levels,” he said.
All IT spending segments are forecast to return to growth in 2021. Enterprise software is expected to have the strongest rebound (8.8%) as remote work environments are expanded and improved. The devices segment will see the second highest growth in 2021 (8%) and is projected to reach $705.4bn in IT spending.
“There are a combination of factors pushing the devices market higher,” said Lovelock. “As countries continue remote education through this year, there will be a demand for tablets and laptops for students. Likewise, enterprises are industrialising remote work for employees as quarantine measures keep employees at home and budget stabilisation allows CIOs to reinvest in assets that were sweated in 2020.”
Through 2024, businesses will be forced to accelerate digital business transformation plans by at least five years to survive in a post-Covid-19 world that involves permanently higher adoption of remote work and digital touchpoints. Gartner forecasts global IT spending related to remote work will hit $332.9bn in 2021, an increase of 4.9% from 2020.
“Digital business represents the dominant technology trend in late 2020 and early 2021 with areas such as cloud computing, core business applications, security and customer experience at the forefront. Optimisation initiatives, such as hyper-automation, will continue and the focus of these projects will remain on returning cash and eliminating work from processes, not just tasks,” said Lovelock.
Despite the availability of Covid-19 vaccines, the virus will continue to require government health interventions throughout 2021. Geopolitical factors such as Brexit and the US-China tension will also inhibit recovery for some regions.
Overall, returning global recovery back to 2019 spending levels will not occur until 2022, although many countries may recover earlier.
“Covid-19 has shifted many industries’ ‘techquilibrium’,” said Lovelock. “Greater levels of digitalisation of internal processes, supply chain, customer and partner interactions, and service delivery is coming in 2021, enabling IT to transition from supporting the business to being the business. The biggest change this year will be how IT is financed, not necessarily how much IT is financed.”
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