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Gartner: A/NZ IT spending growth will surpass worldwide

19 Apr 2019

Worldwide IT spending is projected to total US$3.79 trillion in 2019, an increase of 1.1% from 2018, according to the latest forecast by Gartner.

In New Zealand, spending on technology products and services is expected to increase at double the global rate, reaching NZ$13.7 billion in 2019, up 2.2% from last year, and reaching almost NZ$15.2 billion in 2022.

In Australia, the increase expected to be even higher again, reaching almost AU$94 billion in 2019, a 3% increase from last year, and reach AU$105.7 billion in 2022.

“Currency headwinds fueled by the strengthening U.S. dollar have caused us to revise our 2019 IT spending forecast down from the previous quarter,” says Gartner research vice president John-David Lovelock. 

“Through the remainder of 2019, the U.S. dollar is expected to trend stronger, while enduring tremendous volatility due to uncertain economic and political environments and trade wars.

“In 2019, technology product managers will have to get more strategic with their portfolio mix by balancing products and services that will post growth in 2019 with those larger markets that will trend flat to down,” says Lovelock. 

“Successful product managers in 2020 will have had a long-term view to the changes made in 2019.”

The data centre systems segment will experience the largest decline in 2019 with a decrease of 2.8% (see Table 1). 

This is mainly due to expected lower average selling prices (ASPs) in the server market driven by adjustments in the pattern of expected component costs.

The shift of enterprise IT spending from traditional (non-cloud) offerings to new, cloud-based alternatives is continuing to drive growth in the enterprise software market. In 2019, the market is forecast to reach US$427 billion, up 7.1% from $399 billion in 2018. 

The largest cloud shift has so far occurred in application software. However, Gartner expects increased growth for the infrastructure software segment in the near-term, particularly in integration platform as a service (iPaaS) and application platform as a service (aPaaS).

“The choices CIOs make about technology investments are essential to the success of digital business. Disruptive emerging technologies, such as artificial intelligence (AI), will reshape business models as well as the economics of public- and private-sector enterprises. AI is having a major effect on IT spending, although its role is often misunderstood,” says Lovelock. 

“AI is not a product, it is really a set of techniques or a computer engineering discipline. As such, AI is being embedded in many existing products and services, as well as being central to new development efforts in every industry. Gartner’s AI business value forecast predicts that organisations will receive $1.9 trillion worth of benefit from the use of AI this year alone.”

Gartner’s IT spending forecast methodology relies heavily on rigorous analysis of sales by thousands of vendors across the entire range of IT products and services. 

Gartner uses primary research techniques, complemented by secondary research sources, to build a comprehensive database of market size data on which to base its forecast.