Worldwide IT Spending to Top $3 Trillion in 2007

Published: October 16, 2007

by Timothy Prickett Morgan

With the economy going a bit wobbly in the summer months and with IT often being one of the places where companies immediately cut back on spending, you might be thinking that CEOs and CFOs are sharpening their knives right about now and looking over at the data center. But apparently executives remain optimistic enough about this year and next that Gartner can predict a pretty substantial increase in IT spending worldwide.

Gartner last week held its eponymous Symposium/ITexpo in Orlando, Florida, and released a report at the event that said worldwide IT spending will hit $3.1 trillion in 2007, up 8 percent compared to 2006's levels. The report also said that while it was expecting growth to cool a bit in 2008, the analysts at Gartner nonetheless projected sales would be up 5.5 percent to hit $3.3 trillion next year.

Gartner was not all rosy about the economy, and Peter Sondergaard, senior vice president and global head of research, told the 6,000 attendees of the event during a keynote address that they should prepare two IT budgets for 2008--one that assumes the marginal growth in IT spending that we have seen per year since the dot-com bust, and the other assuming that IT shops would have to cut costs because of a possible recession. "The business plans that you had in June are probably not going to completely address the changed conditions of your business in November," Sondergaard said. "Together with your business colleagues and your CEO, you are going to have to deliver new efficiencies, new innovations, and new ideas to sustain profitability and growth. IT will be core to many of those responses. Simply delivering internally focused savings isn’t going to be enough. You need to step up to the challenge of delivering new solutions to those critical business imperatives."

Gartner reminded everyone that IT spending is exploding in the developing economies, and now one-third of total IT spending--more than $1 trillion--now happens outside of North America, Western Europe, and Japan. (Of course, that also means that more than $2 trillion of IT spending happens in the developed economies.) IT spending on software, services, and mobility has been increasing for years, and Gartner expects this trend to continue. These three areas combined accounted for 57 percent of total IT spending in 2006, or just over $1.63 trillion, and are expected to rise to 60 percent of spending in 2008, or $1.98 trillion. This part of the market will grow by 21.5 percent from 2006 through 2008, compared to overall growth of 15 percent from 2006 to 2008 for the overall IT market. So spending on hardware (storage, servers, PCs and such) and other infrastructure like telecommunications and on people is basically going to grow at a very modest rate.

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