Corporate tech leaders are accelerating spending on IT as they look ahead to the rest of the year. A new forecast from research firm Gartner based on its analysis of sales by technology suppliers predicts that global tech spending will hit $4.2 trillion by the end of 2021, an annual increase of almost 9%.
The rise mainly reflects a rapid switch from defense to offense, as CIOs boost investment in everything from enterprise software and devices to communications and cloud computing after tightening budgets in 2020, which saw overall spending barely increase.
“Last year was all about digital sprints,” said John-David Lovelock, a Gartner analyst. “It was about really short time frames and implementing systems you could get your hands on. Now [CIOs] are looking longer term again.”
Higher prices are also having an impact on budgets. A shortage of microchips has led some CIOs to stock up on servers, PCs and other hardware. Total spending on devices is likely to rise to $794 billion this year, an increase of almost 14% and the biggest percentage growth amongst the main tech expense categories Gartner tracks.
Lovelock cautions that there seems to be something of “a bubble” in hardware, as companies continue a big gear-refreshment cycle that kicked off last year to support things such as remote work. Investment in PCs and tablets, for instance, is forecast to rise 8% this year, way above its long-term 2% per annum growth trend.
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Spending on cloud computing and other tech services, which is forecast to hit almost $1.2 trillion this year, appears more sustainable as businesses look to get a technological edge over the competition. Gartner notes investment in cloud and other infrastructure could outpace that on software applications in 2021 for the first time in quite a few years.
Other forecasters see IT spending steadily increasing as a portion of companies’ revenues. Consulting firm E&Y has projected this percentage could rise to an average of over 5% next year, up from 3.6% in 2018. The exact number will vary by industry—banks, for instance, invest the equivalent of more than a tenth of their annual revenues in IT—but the overall trend underlines the key strategic role now being played by technology and those who manage it.
Of course, these and other bullish projections assume that the global economy continues to recover steadily from its Covid-19 nightmare. Should one of the many variants that are rapidly emerging defeat existing vaccine protections, then CIOs’ purse strings could tighten again even faster than they’re being loosened today.