IT Spending Growth To Slow In 2012, Says Gartner

Published: October 24, 2011

by Timothy Prickett Morgan

It is very difficult for IT spending to grow faster than gross domestic product in any country or globally for very long. While the economies of the Western world are by and large still growing, at least at the crudest levels that we can measure with the economic tools we have, that growth is slowing. And consequently, the people who make a living calling the IT market are beginning to think that growth will slow a bit in 2012.

Gartner hosted its Symposium/ITxpo last week, and Peter Sondergaard, a senior vice president at Gartner and the head of its global research operations, said the words that the 8,500 CIOs and other IT leaders at the event didn't want to hear. And you don't want to hear either.

"The second recession is about to hit, and you must decide which way to turn. Our forecast for enterprise IT spending globally shows a steady, annual rate of roughly 4 percent per year through 2015. Now, the impact this measures is the overall impact on the market, including enterprise and consumer spending. Our outlook is made on the assumption of continued economic uncertainty and at best sluggish growth in the United States, Japan, and Western Europe. Measured in local currencies, Western Europe and Japanese markets will actually decline in 2012. The growth rate, therefore, for business and consumer IT spending, is forecast at only 3.9 percent next year. Now, whether or not you see this yet, we believe the economy will impact your budget in 2012 and your business will actually face difficult budgetary questions. Your choices will obviously depend on the geographies you operate in, your industry, and also the strength of your enterprise, your organization, when the storm arrives."

Well, ain't that just peachy?

Enterprise IT spending--which includes hardware, software, services, and telecom for the world's SMBs and enterprises--is projected to grow 5.9 percent as measured in U.S. dollars, hitting $2.6 trillion, but Sondergaard said in a separate statement last week that growth will slow to 3.9 percent in 2012. But underneath those numbers, there is a tremendous amount of churn and change that is masked by the aggregate dollars.

"For the IT leader to thrive in this environment, IT leaders must lead from the front and re-imagine IT," Sondergaard said. "IT leaders must embrace the post-modern business, a business driven by customer relationships, fueled by the explosion in information, collaboration, and mobility."

Some interesting observations from Sondergaard.

• Cloud computing is going to do to corporate computing what supply chain management did for manufacturing, and it is going to be extremely disruptive. Public cloud spending only hit $74 billion in 2010, about 3 percent of all enterprise IT spending last year, but the growth of public cloud spending is five times faster than overall IT spending, and is estimated to have a compound annual growth rate of 19 percent between now and 2015.
• The data warehouse is dead, but big data and analytics on a plethora of platforms is alive and well. The idea of a single enterprise data warehouse that serves all business needs was a beautiful idea, but the need to process mountains of unstructured data in conjunction with the operational data stored in relational databases means you can't put it all in one box. I think of this as the next wave of distributed computing, this one focused more on sorting through data than on transaction processing.
• Mobile is what we all want to go. Gartner expects there to be 900 million tablets in the world by 2016, a factor of 45 growth over last year's 20 million sales of the iPad, the only practical tablet so far on the market. (Other Windows and Android devices will soon be here as will ultrabooks, Intel's answer to the tablet.) By 2014, the number of mobile computer--smartphones, tablets, and such--will outnumber desktop and laptop machines. Your apps need to work on these.
• Social networks. This is what some people think computing is. Even if you disagree, tough. A fifth of the world already thinks this is what a computer is for. It won't be long, I think, before it is more than half. Apps will go social because this is the new metaphor, replacing the windowing system invented at Xerox PARC when I was a child.
• Gartner says 350 companies worldwide will invest more than $1 billion in IT. That means IT is strategic and important, even if it is undergoing wrenching change.

At times like these, when the change seems a bit too much to bear, I am reminded of the wise words of General Erik Shinseki, a former chief of staff of the Army during the Clinton administration: "If you don't like change, you are going to like irrelevance a whole lot less."

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