Gartner sees NZ IT spending to grow 2.2 % this year

AI is having a major effect on IT spendingJohn-David Lovelock, Gartner

Gartner says global IT spending is projected to total US$3.79 trillion in 2019, an increase of 1.1 per cent from 2018.

But the growth rate is higher for New Zealand and Australia, according to the analyst firm’s latest quarterly IT spending forecast.

In New Zealand, spending on technology products and services is expected to reach NZ$13.7 billion in 2019, up 2.2 per cent from last year, and reach almost $15.2 billion in 2022, reports Gartner

In Australia, spending on technology products and services is expected to reach almost A$94 billion in 2019, a 3 per cent increase from last year, and reach $105.7 billion in 2022

“Currency headwinds fueled by the strengthening US dollar have caused us to revise our 2019 IT spending forecast down from the previous quarter,” says John-David Lovelock, research vice president at Gartner.

Gartner predicts that organisations will receive US$1.9 trillion worth of benefit from the use of AI this year alone

“Through the remainder of 2019, the US dollar is expected to trend stronger, while enduring tremendous volatility due to uncertain economic and political environments and trade wars.

“In 2019, technology product managers will have to get more strategic with their portfolio mix by balancing products and services that will post growth in 2019 with those larger markets that will trend flat to down,” says Lovelock. “Successful product managers in 2020 will have had a long-term view to the changes made in 2019.”

The largest region for total IT spend in 2019 remains North America, with US$1.25 trillion. However, the fastest-growing region is emerging Asia-Pacific, with 2019 constant-currency growth of 5.0 per cent.

Gartner says the datacentre systems segment will experience the largest decline in 2019 with a decrease of 2.8 per cent.

No caption

This is mainly due to expected lower average selling prices (ASPs) in the server market driven by adjustments in the pattern of expected component costs.

No caption

The shift of enterprise IT spending from traditional (non-cloud) offerings to new, cloud-based alternatives is continuing to drive growth in the enterprise software market.

No caption

This year, the market is forecast to reach $427 billion, up 7.1 per cent from $399 billion in 2018.The largest cloud shifthas so far occurred in application software. However, Gartner expects increased growth for the infrastructure software segment in the near-term, particularly in integration platform as a service (iPaaS) and application platform as a service (aPaaS).

“The choices CIOs make about technology investments are essential to the success of digital business. Disruptive emerging technologies, such as artificial intelligence (AI), will reshape business models as well as the economics of public- and private-sector enterprises.

“AI is having a major effect on IT spending, although its role is often misunderstood,” says Lovelock.

“AI is not a product, it is really a set of techniques or a computer engineering discipline. As such, AI is being embedded in many existing products and services, as well as being central to new development efforts in every industry. Gartner’s AI business value forecast predicts that organisations will receive $1.9 trillion worth of benefit from the use of AI this year alone.”

Get the latest on digital transformation: Sign up forCIO newsletters for regular updates on CIO news, career tips, views and events.Follow CIO New Zealand on Twitter:@cio_nz