Strong software market drives largest IT spending growth in a decade

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Thanks to growing interest in ‘hot’ technologies such as artificial intelligence, the Internet of Things and cloud computing, spending on enterprise software will see the largest increase among top technology sectors this year.

Worldwide IT spending will increase by more than 6 percent this year, led by an especially strong software market, according to research firm Gartner, Inc. Total worldwide IT spending will reach $3.7 trillion.

Emerging or re-emerging hot technologies are helping to drive much of the increased spending on enterprise software, which is projected to rise by 11.1 percent in 2018. That growth will continue at approximately 8.4 percent in 2019, as more organizations invest in artificial intelligence, the Internet of Things, and security tools.

The software market was by far the healthiest area of growth among the information technology sectors evaluated by Gartner. The IT services sector is expected to see 7.4 percent growth, followed by the devices sector at 6.6 percent growth, communications services at 4.3 percent growth, and data center systems at 3.7 percent growth.

“This is the highest annual growth rate that Gartner has forecast since 2007 and would be a sign of a new cycle of IT growth,” noted John-David Lovelock, research vice president at Gartner. “However, spending on IT around the world is growing at expected levels and is in line with expected economic growth. Through 2018 and 2019, the U.S. dollar is expected to trend stronger while enduring tremendous volatility due to the uncertain political environment, the North American Free Trade Agreement renegotiation and the potential for trade wars.”

Still, it’s all good news for the software sector. Barring unexpected disruption, Lovelock said the software industry is expected to continue to capitalize on the evolution of digital business. Application software spending is expected to continue to rise through 2019, and infrastructure software will also continue to grow.

One technology sector that is experiencing challenges is the data center systems market. The Gartner spending forecast says data center systems spending will see 3.7 percent growth this year. That is down from 6.3 percent growth in 2017.

“The longer-term outlook continues to have challenges, particularly for the storage segment,” the Gartner report says. “The strength at the end of 2017 was primarily driven by the component shortage for memory components, and prices have increased at a greater rate than previously expected. Whereas previously, component shortages were expected to ease into 2018, the shortages are now expected to continue throughout the year with the supply not expected to ease until the end of the year.”

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