Gartner’s latest analysis shows worldwide IT spending will total US$3.5 trillion in 2015, representing a 5.5 per cent decline from 2014 – but there’s no cause for alarm, say analysts, who attribute the decline to the rising US dollar.
“We want to stress that this is not a market crash. Such are the illusions that large swings in the value of the US dollar versus other currencies can create,” said John-David Lovelock, research vice president, Gartner.
“However, there are secondary effects to the rising US dollar. Vendors do have to raise prices to protect costs and margins of their products, and enterprises and consumers will have to make new purchase decisions in light of the new prices.
The figures are contained in the quarterly Gartner Worldwide IT Spending Forecast, which shows that communications services will continue to the largest IT spending segment in 2015, with spend of nearly US $1.5 trillion – but it is also experiencing the most significant decline among the five IT sectors.
Spending on enterprise software is expected to decline slightly (by 1.2 per cent) to US$310 billion, while IT services will decline by 4.3 per cent to US$914 billion.
Gartner analysts said many software vendors will try to keep prices on hold, because Software-as-a-Service (SaaS) is about market share, not profitability, and vendors need to hold onto every client. In the services space, Gartner expects modest increases in spending on consulting in 2015 and 2016, due to vendors generating new demand from buyers looking for help with building a digital business. However the forecast for implementation services has been reduced, with buyers showing preferences for solutions that minimise time and cost of implementation and more efficient delivery methods.
Again, the figures can give a deceptively negative picture of overall spend.
“IT activity is stronger than the growth in spending indicates. Price declines in major markets like communications and IT services, and switching to ‘as a service’ delivery, mask the increase in activity,” Lovelock said.
Gartner will provide more detailed analysis on the outlook for the IT industry from 2015 to 2019 in a free webinar, ‘IT Spending Forecast, 2Q15 Update: Why Is Global IT Spending Shrinking?’, on July 14. For more information, visit http://www.gartner.com/webinar/2939722.
