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Enterprise software spending set to grow thanks to AI and digital boost

Gartner forecasts businesses will buy more software, with spending shifting to AI and digital initiatives

Gartner’s latest IT spending forecast has predicted a massive boost in IT spending on enterprise software.

The analyst forecast that enterprise software will continue to show strong growth, with worldwide software spending increasing by 9.5% in 2018 and by 8.4% in 2019 to reach a total of $421bn.

It said it expects organisations to increase spending on enterprise application software this year, shifting more of their budget to software as a service (SaaS).

According to Gartner, the availability of new SaaS products is encouraging new adoption and spending across many subcategories, such as financial management systems, human capital management and analytic applications.

Overall, Gartner forecast a 4.5% increase in IT spending in 2018 compared with 2017, to reach $3.7tn.

John-David Lovelock, research vice-president at Gartner, said: “Global IT spending growth began to turn around in 2017, and continued growth is expected over the next few years. However, uncertainty looms as organisations consider the potential impacts of Brexit, currency fluctuations and a possible global recession.”

Last year, when Computer Weekly spoke to Lovelock about the 2017 spending forecast, he suggested political upheaval and Brexit would force many businesses to adopt a wait-and-see strategy to IT investments.

But now, although the Brexit negotiations are far from over and political turmoil is now a daily occurrence, Lovelock feels there is a renewed impetus to invest in IT.

He said spending patterns are likely to shift towards projects in digital business, blockchain, the internet of things and progression from big data to algorithms to machine learning and artificial intelligence (AI). These are set to be the main drivers for IT spending growth going forward, said Lovelock.

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“Looking at some of the key areas driving spending over the next few years, Gartner forecasts $2.9tn in new business value opportunities attributable to AI by 2021, as well as the ability to recover 6.2 billion hours of worker productivity,” he said. “Capturing the potential business value will require spending, especially when seeking the more near-term cost savings.

“Spending on AI for customer experience and revenue generation is likely to benefit from AI being a force multiplier – the cost to implement will be exceeded by the positive network effects and resulting increase in revenue.”

Gartner forecast a slight increase of 0.6% in datacentre spending in 2018 compared with 2017, but predicted a decline of 0.2% in 2019. As Computer Weekly has reported previously, this may be related to the increase in SaaS and cloud-based services.

And although it may be many months, even years, before IT understands the full impact of the microprocessor flaws Spectre and Metdown, there is strong evidence to suggest they may drive IT departments to move more workloads to public cloud services.

As for spending on devices, Gartner forecast flat PC growth in 2018 and a marginal increase in spending on mobile devices due to average selling price rises for these devices. It noted that the impact of the iPhone 8 and iPhone X was minimal in 2017, as expected. However, it expected iOS shipments to grow by 9.1% in 2018.

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