by Byron Connolly

Tech spending to hit $76B

Jul 01, 20142 mins
Finance and Accounting SystemsFinancial Services IndustryIT Management

Technology spending in Australia will reach $76 billion in 2014, an increase of 2.3 per cent over last year, according to Gartner’s latest quarterly forecast.

Spending across the Asia-Pacific region is forecast to reach US$746 billion in 2014, up by 3 per cent from 2013 but revised downward from 4.4 per cent in the previous forecast.

The researcher attributed this slower growth to a reduction in demand for devices, data centre systems, and IT services.

Worldwide spending will also be slower than expected and will hit US$3.7 trillion this year, a 2.1 per cent year-on-year increase but down from earlier projections of 3.2 per cent growth.

Richard Gordon said price pressure based on increase competition, lack of product differentiation and the increased availability of viable alternative solutions has dampened the short-term IT spending outlook.

“However, 2015 through to 2018 will see a return to normal spending growth levels as pricing and purchasing styles reach a new equilibrium.

“IT is entering its third phase of development, moving from a focus on technology and processes in the past to a focus in the future on new business models enabled by digitalisation,” Gordon said.

By market, enterprise software spending will total $321 billion in 2014, up 6.9 per cent year-on-year. Companies are expected to purchase database management systems as they initiate big data and digitalisation initiatives.

Slower growth is expected in the applications sector, particularly around office suite and digital content creation. Growth in these areas is being impacted by slow PC sales and the rapid move to cloud offerings, Gartner said.

Data centre systems spending will hit $140 billion in 2014, a 4 per cent increase from last year. Constrained spending levels are negatively impacted data centre revenue, particular with external controller-based storage, Gartner said.

IT services spending will be US$967 billion in 2014, up 3.8 per cent from 2013 following weak vendor performance last year across many geographies and segments.

IT outsourcing is growth slowing than expected as sharply reduced pricing by large vendors impacts the cloud storage services sector, Gartner said. Public cloud services are also cannibalising sales of traditional data centre outsourcing services, the researcher said.

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