Software spending set to skyrocket in 2020
- 20 January, 2020 08:06
Spending on technology at a global level is expected to total US$3.9 trillion in 2020, spearheaded by software as the fastest-growing major market.
Representing an increase of 3.4 per cent from 2019, according to Gartner findings, investments are forecast to cross into $4 trillion territory next year.
“Although political uncertainties pushed the global economy closer to recession, it did not occur in 2019 and is still not the most likely scenario for 2020 and beyond,” said John-David Lovelock, research vice president, Gartner. “With the waning of global uncertainties, businesses are redoubling investments in IT as they anticipate revenue growth, but their spending patterns are continually shifting.”
Software will be the fastest-growing major market in 2020, reaching double-digit growth at 10.5 per cent to total $503 billion in spending.
“Almost all of the market segments with enterprise software are being driven by the adoption of software-as-a-service [SaaS],” Lovelock added. “We even expect spending on forms of software that are not cloud to continue to grow, albeit at a slower rate.
“SaaS is gaining more of the new spending, although licensed-based software will still be purchased and its use expanded through 2023.”
Communications services spending will reach approximately $1.4 trillion at growth of 1.5 per cent while IT services will account for almost $1.1 trillion of investments at growth of five per cent. Data centre systems will represent $208 billion in spending with growth of 1.9 per cent.
Overall, growth in enterprise IT spending for cloud-based offerings will be faster than growth in traditional (non-cloud) IT offerings through 2022.
Lovelock said organisations with a high percentage of IT spending dedicated to cloud adoption is "indicative of where the next-generation, disruptive business models will emerge".
“Last quarter, we introduced the ‘and’ dilemma where enterprises are challenged with cutting costs and investing for growth simultaneously,” he outlined.
“Maturing cloud environments is an example of how this dilemma is alleviated: Organisations can expect a greater return on their cloud investments through cost savings, improved agility and innovation, and better security. This spending trend isn’t going away anytime soon.”
Despite last quarter showing the sharpest decline within the device market among all segments, Lovelock said it will return to overall growth in 2020 due to the adoption of "new, less-expensive phone options from emerging countries".
“The almost $10 billion increase in device spending in Greater China and emerging Asia Pacific is more than enough to offset the expected declines in Western Europe and Latin America,” Lovelock said.