Gartner Curtails 2012 IT Spending Outlook

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January 10, 2012 – European economic worries and flood concerns in Thailand led Gartner to reduce its overall IT spending growth expectations for the coming year, though there are bright spots in enterprise software for data management and virtualization.

The firm cut its global spending growth outlook for IT in 2012, including telecom equipment and services, by 0.9 percent to 3.7 percent, according to a Web seminar Tuesday from Gartner analysts. The largest single factor for the reduced outlook is the uncertainty with the finances of the European Union, where IT spending may even decline in some areas, says Gartner economist George Shiffler. The computing hardware sector took the biggest single hit, with expected growth cut by 3.4 percent to 5.1 percent in 2012 due to damages to product sustained during floods in Thailand late last year. Water damage has destroyed or delayed orders for hard disk drives and other hardware from large vendors such as Western Digital, IBM and NetApp, and Gartner says it may take a year for that region and market to fully recover.

While enterprise software growth was also cut from earlier forecasts, spending still should reach about $285 billion worldwide in 2012, which would be an increase of 6.4 percent from last year’s spending. That increase is down just more than 1 percent from estimates made by Gartner in the third quarter of 2011. Software spending hit a recent annual high in 2011, reaching $268 billion and gaining 9.6 percent from the previous year. Gartner anticipates that software spending figure to continue upward through the next three years, with a forecast of $346.8 billion for 2015.

Analyst Colleen Graham says there are some tough spots in enterprise software in areas such as operating systems software and office suites. However, unlike hardware, this market of IT spending is not taking an “across the board hit” like the stop to orders experienced during the recession in 2009, when software spending declined by 2.5 percent from the previous year.

Software for virtualization, collaboration, data management and security are all expected to sell well in 2012, in part making up for time lost on projects and development from recent years, says Graham. In addition, software on-demand and maintenance deals will maintain a flow of software spending on existing software, she says.

“Overall, the forecast still does look pretty good [for enterprise software] and … although the macroeconomic environment has deteriorated, particularly in demand, we’re actually seeing the individual software markets that underlie this forecast reacting very differently to the downturn,” Graham says.

For more details and a Web seminar on the spending expectations and revisions by Gartner, click here.

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