Gartner, IDC Boost IT Spending Outlooks For 2011

Published: July 11, 2011

by Timothy Prickett Morgan

Contrary to how you might be feeling personally or what your boss might be telling you about there being no money for raises and bonuses or all that shiny new hardware you want for the data center, it looks like the IT departments of the world are going to be given a little bit more money to play with, according to the latest forecasts from Gartner. And IT spending growth in the United States, says IDC, is set to double-time the rate of change for gross domestic product this year, too.

Gartner upped its forecast for IT spending for 2011 to $3.67 trillion, up 7.1 percent from last year's $3.43 trillion. In March, after the U.S. dollar declined a bit more and Gartner added tablet computers to its corporate IT sector, the company raised its IT spending growth projections from 5.1 percent back in a November 2010 report to 5.6 percent.

"It is a bit surprising that we have not seen a more significant impact on our global IT spending forecast as a results of the Japan earthquake and tsunami," said Richard Gordon, research vice president at Gartner, in discussing the IT spending forecasts, "but despite widespread concerns about disruptions to the supply of critical components in the initial aftermath of the natural disaster, there has not been a dramatic impact on overall IT spending. For 2011 as a whole, we expect Japan IT spending to be down in local currency, but we expect a positive growth trend to emerge in the second half of the year and continue into 2012."

Now, after we have the first half of 2011 under our belts, Gartner is saying that the hardware business is going to come close to repeating its performance in 2010, when pent up demand in the wake of the Great Recession caused spending on servers, storage, networking equipment, and other hardware to rise by 12.1 percent to $375 billion. Looking ahead to 2011, the analysts with the pointy hats at Gartner are now saying that hardware sales will increase by 11.7 percent this year, hitting $419 billion.

Spending on enterprise software will be up even higher in 2011 than it was in 2010, rising 9.5 percent to $268 billion. Interestingly, software as a service (SaaS) sales are booming, and accounted for $10 billion of software spending and about 10 percent of enterprise application spending worldwide; by 2015, Gartner expects SaaS revenues to double to $20 billion, representing about 15 percent of application budgets.

IT services spending will rise at more than twice the rate it did last year, boosting 6.6 percent to $846 billion. IT services only grew by 3.1 percent in 2010, to $793 billion. Public cloud services are one of the things that are growing at a much faster clip, with sales of $74 billion in 2010 and projected to grow by more than 20 percent to $89 billion this year. Gartner expects for worldwide public cloud revenues to reach $177 billion by 2015, which is a very large portion the IT pie hardware, software, and services pie. But when you make the IT budget pie much larger by including telecom services, as Gartner does, then public cloud spending only accounted for 2 percent of total IT spending in 2010 and will only account for 5 percent in 2015. By the way, when you do the math on that, IT spending will actually be down a bit in the projections, to around $3.5 trillion in 2015, while public cloud spending will rise by a factor of 2.5 over the six-year term of 2010 through 2015.

The phone bill at corporations around the globe continues to be mind-numbingly large and expanding, a bit like the universe itself. Worldwide spending on telephone and data services rose by 7.3 percent in 2010, to just over $2 trillion, and will expand by another 7.1 percent this year according to Gartner, to $2.14 trillion. (How many minutes and how much data transfer is that, precisely?)

Over at IDC, the augurs put out a statement of their own about how IT spending was shaping up for 2011 in the United States. Based on survey data from more than 5,700 respondents in the States, who were approached by IDC from December 2010 through March 2011, as well as other macroeconomic data, IDC expects for IT spending to rise by 5.6 percent in 2011, which is almost twice as fast as the growth of the overall economy as measured by gross domestic product. GDP is forecast to rise by 3 percent this year. IDC did not put a number on IT spending in the U.S. in its teaser statement about its projections.

Both IDC and Gartner are putting together more detailed presentations on IT spending projections for the current year, and I will be going through them with a fine-toothed comb to find any data that could be useful to you. Stay tuned.

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