Global IT Spend To Rise Amid Automation Focus, Says Gartner

Analyst house Gartner has forecast a healthy IT spending increase in 2023, as CIOs look to automation and efficiency to negate ongoing skills shortages.

According to the forecast in the “Gartner Market Databook, 2Q23 Update,” worldwide IT spending to total $4.7 trillion in 2023, an increase of 4.3 percent from 2022.

This 4.3 percent rise is down somewhat from a Gartner spending forecast in April, when the analyst group projected that the worldwide IT spending would total $4.6 trillion in 2023, an increase of 5.5 percent from 2022.

IT spending forecast

Gartner noted that the 4.3 percent IT spending rise in 2023 comes as CIOs continue to lose the competition for IT talent, meaning there is something of a skill shortage in certain markets.

Gartner found that CIOs are shifting spending to technologies that enable automation and efficiency to drive growth at scale with fewer employees.

The good news for the software segment, is that this sector will see double-digit growth (13.5 percent) in 2023 (after a 10.3 percent growth in 2022) as organisations increase utilisation and reallocate spending to core applications and platforms that support efficiency gains, such as enterprise resource planning (ERP) and customer relationship management (CRM) applications.

Vendor price increases will also continue to bolster software spending through this year.

Interestingly, Gartner also found generative AI is not yet significantly impacting IT spending levels.

“Digital business transformations are beginning to morph,” said John-David Lovelock, distinguished VP analyst at Gartner. “IT projects are shifting from a focus on external facing deliverables such as revenue and customer experience, to more inward facing efforts focused on optimisation.”

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While the overall outlook for enterprise IT spending is positive, devices spending will decline 8.6 percent in 2023 due to the ongoing impact of inflation on consumer purchasing power. This is on top of the 6.3 percent decline in 2022.

Data centre system spending is forecast to decline 1.5 percent in 2023, after a 16.6 percent rise in 2022.

Spending on IT services is projected to grow 8.8 percent in 2023, after a 7.5 percent rise in 2022.

Communication services spending is much more modest, with a 2.7 percent rise expected in 2023, after a decline of 1.9 percent in 2022.

“The devices segment is experiencing one of its worst growth years on record,” said Lovelock. “Even as inflation eases slightly in some regions, macroeconomic factors are still negatively impacting discretionary spending and lengthening device refresh cycles. Devices spending is not expected to recover to 2021 levels until at least 2026.”

Generative AI

Another notable finding from Gartner is that while generative artificial intelligence (AI) is top of mind for many business and IT leaders, it is not yet significantly impacting IT spending levels.

According to Gartner, in the longer-term, generative AI will primarily be incorporated into enterprises through existing spending.

“Generative AI’s best channel to market is through the software, hardware and services that organisations are already using,” said Lovelock. “Every year, new features are added to tech products and services as add-ons or upgrades. Most businesses will incorporate generative AI in a slow and controlled manner through upgrades to tools that are already built into IT budgets.”

“When it comes to AI this year, organisations can thrive without having AI in production but they cannot be without a story and a strategy,” added Lovelock.