IT budgets on the rise, driven by software, AI investments

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Worldwide IT spending will reach $3.7 trillion this year, with the largest growth expected in spending on enterprise software.

That is the prediction of research firm Gartner Inc., which says organizations will increase spending on IT by approximately 4.5 percent in 2018. Enterprise software spending is the bright spot in Gartner’s latest study, which will see a 9.5 percent growth in 2018 with another 8.4 percent growth in 2019, and will total $421 billion.

“Global IT spending growth began to turn around in 2017, with continued growth expected over the next few years. However, uncertainty looms as organizations consider the potential impacts of Brexit, currency fluctuations, and a possible global recession,” said Gartner Research Vice President John-David Lovelock. “Despite this uncertainty, businesses will continue to invest in IT as they anticipate revenue growth, but their spending patterns will shift.”

The primary drivers of growth will be projects in digital business, blockchain, the Internet of Things, and progression from big data to algorithms to machine learning to artificial intelligence, Lovelock said.

Organizations will increase their spending on enterprise application software in 2018, with more of their budgets shifting to software-as-a-service (SaaS). The growing availability of SaaS-based products is encouraging new adoption and spending in such areas as financial management systems, human capital management and analytic applications, Gartner says.

Another bright spot for IT spending will be in the area of artificial intelligence.

“Looking at some of the key areas driving spending over the next few years, Gartner forecasts $2.9 trillion in new business value opportunities attributable to AI by 2021, as well as the ability to recover 6.2 billion hours of worker productivity, Lovelock said. “That business value is attributable to using AI to, for example, drive efficiency gains, create insights that personalize the customer experience, entice engagement and commerce, and aid in expanding revenue-generating opportunities as part of new business models driven by the insights from data.”

“Capturing the potential business value will require spending, especially when seeking the more near-term cost savings. Spending on AI for customer experience and revenue generation will likely benefit from AI being a force multiplier – the cost to implement will be exceeded by the positive network effects and resulting increase in revenue,” Lovelock concluded.

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