September 11, 2012 – Economic conditions have put a damper on worldwide IT spending this year, though strong software sales and expectations of more investment in the cloud made for bright spots in a new industry forecast by IDC.
IT spending growth is expected to settle in at $2 trillion for 2012, or approximately 6 percent higher than spending in 2011, according to IDC’s “Worldwide Black Book,” a forecast of IT spending in 54 countries and more than two-dozen market segments, such as hardware, software, IT services and mobile. IDC pointed to growth driven forward with more sales in software, storage and enterprise network and mobile devices, but offset by a slowdown in PC and server markets, as well as worrisome European economic conditions. Overall IT spending continues to tick upward, and, not including telecom investment, is predicted to reach $2.46 trillion by 2016.
U.S. IT spending growth isn’t expected to reach even half of its 2011 dollar amount, according to IDC. In terms of currency in its present value, IT and telecom services combined will grow by 5 percent ($3.6 trillion) in 2012, which IDC called a “significant downturn” from its U.S. dollar growth rate of 10.5 percent in 2011 from the previous year.
While other areas of IT spending dipped or merely held the line, software continued its year-after-year growth, with an expectation consisting of 18.3 percent of total IT spending in 2012, according to IDC. Among the fastest growing segments of software spending were enterprise social, collaborative applications, security management, analytics, virtualization and CRM, showing a “combination of enterprise applications and system infrastructure” offerings, says Stephen Minton, VP of IDC’s Global Technology and Industry Research organization.
For all the talk of cloud computing and SaaS, neither have made a major impact on IT spending as a whole. However, that’s changing; by 2016, 23 percent of hardware spending will be on infrastructure as a service, and 14 percent of software spending will be on cloud-based solutions. The public cloud is slated to grow 32 percent this year to $30 billion, and more than tripling that investment amount by 2016, according to Minton.
“It’s in its early days, but cloud is definitely gaining traction and will be a big component of IT spending within a few years,” he says.
The new forecast is consistent with one made by Minton and IDC in March, but still down from the 6.9 percent growth in initial predictions for 2012 made in December. It’s also a decline from the percentage of overall growth in 2011, which hit a 7-percent increase over the prior year. Minton stresses that it could’ve been worse, given the dire economic predictions out of Europe earlier in the year and the continued wavering conditions on that continent. In stronger European markets like Germany, for example, Minton says that software and services were ahead of lowered expectations, and that consumer spending on smartphones and tablets was strong “despite everything which is going on” in the E.U.