Study: Digital transformation will drive tech spending higher

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Gartner Research says that funding for the increased spending will come from outside IT departments

A new forecast from Gartner predicts worldwide IT spending to total $4.1 trillion in 2021. This jump represents an increase of 8.4% from 2020, according to the research group’s quarterly IT spending forecast. Moreover, they say the source of funds for new digital business initiatives will more frequently come from business departments outside IT and charged as a cost of revenue or cost of goods sold.

“IT no longer just supports corporate operations as it traditionally has, but is fully participating in business value delivery,” said John-David Lovelock, research VP at Gartner. “Not only does this shift IT from a back-office role to the front of business, but it also changes the source of funding from an overhead expense that is maintained, monitored and sometimes cut, to the thing that drives revenue.”

The update forecasts all IT spending segments to have positive growth through 2022. The highest growth will come from devices (14%) and enterprise software (10.8%) as organizations “shift their focus to providing a more comfortable, innovative and productive environment for their workforce.”

Predicting a “K-shaped recovery”

Optimization and cost savings efforts won’t disappear simply because there’s more economic certainty in 2021, Gartner says. The focus for CIOs through the remainder of the year will be to complete the digital business plans. That is to say, the plans that aim to enhance, extend and transform the company’s value proposition.

Recovery across countries, vertical industries and IT segments still varies significantly. Gartner says this is prompting a K-shape economic recovery. From an industry perspective, banking and securities and insurance spending will closely resemble pre-pandemic levels as early as 2021, while retail and transportation won’t see the same recovery until closer to 2023.

“Last year, IT spending took the form of a ‘knee jerk’ reaction to enable a remote workforce in a matter of weeks. As hybrid work takes hold, CIOs will focus on spending that enables innovation, not just task completion,” said Mr. Lovelock.