Analysts Forecasting a Bright Future for IT Spending

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IT spending in the upcoming year looks bright.

We’re paying a lot of attention on IT spending right now in light of the major shift in work patterns experience over the past year. The good news is that most analysts foresee a bright future.

Gartner predicts that worldwide IT spending will reach $3.8 trillion in 2021, an increase of 4% from 2020. This is very good news considering 2020 fell 5.4% from the previous year.

“In the 25 years that Gartner has been forecasting IT spending, never has there been a market with this much volatility,” said Gartner analyst John-David Lovelock. 

The biggest rebound is expected in enterprise software (7.2%). This is being fueled by accelerated digitalization efforts, the remote workforce, delivering virtual services such as distance learning or telehealth, and automation. Further areas of spending increase include data center systems, communications, IT services, and devices. 

Increased cloud spend expected in 2021. 

Cloud spend, surprisingly, did not see a big leap in 2020. Lovelock puts this down to a lot of try and buy programs by cloud providers. Therefore, he forecast a jump in cloud spend this year.

Meanwhile, edge computing spending is another growth area according to International Data Corporation (IDC). The worldwide edge computing market is expected to reach $250.6 billion in 2024 with a compound annual growth rate of 12.5% per year. The services market should account for 46.2% of all edge spending by 2024, followed by hardware at 32.2%, and edge software at 21.6%. 

“Edge products and services are powering the next wave of digital transformation,” said IDC analyst Dave McCarthy. “With the ability to place infrastructure and applications close to where data is generated and consumed, organizations of all types are looking to edge technology as a method of improving business agility and creating new customer experiences.”

Enterprise Storage Group (ESG), too, is bullish about IT spending. 60% of survey respondents in its 2021 Technology Spending Intentions Survey said their organization’s 2021 technology spending was likely to increase from 2020 levels. They expect the key areas of investment to be public cloud infrastructure and applications, cybersecurity, artificial intelligence, and digital collaboration and transformation. 

The journey to the cloud is definitely a big trend in overall spending. 78% are using some form of public cloud infrastructure, according to ESG. This is up 11% from the previous year. Further, 85% say that the events of 2020 are propelling more applications and workloads to the cloud.

“Companies need to adjust to changing business conditions on a daily basis, rethink how their employees work and collaborate, and deliver a compelling, modern and secure customer experience that reflects current customer needs,” said ESG analyst John McKnight. 

Recovering from the ravages of 2020.

For many small and mid-sized business (SMBs), the various forecasts covered here are welcome news. Many suffered, and continue to suffer, from the ravages of Covid-19-induced slowdowns in 2020. A study by SMB Group found that 79% of midmarket firms experienced a negative impact in their businesses due to revenue hits, shutdowns, lack of funds, staff losses, and the shift to remote work.

Countering the positive predictions of Gartner, IDC and ESG, the SMB Group found that many SMBs are remaining cautious about the future. This is impacting their technology spending plans. The study found that 46% of SMBs only believe conditions will improve in 2021. That may remain the minority, but at least it is an improvement from the 23% that believed in positive improvement six months previously. And the fact remains that 29% of SMBs predict that conditions could worsen in 2021. 

Overall then, it looks like some SMBs may continue to struggle. But brighter days appear to be ahead for enterprise users.