Gartner IT Spending Forecast Optimistic After Declines in 2020

The new IT spending forecast from Gartner projects a 4% global increase in 2021 over 2020, reaching $3.8 trillion. Unfortunately, the research firm expects IT spending to reach just $3.6 trillion this year. That figure is a dip of 5.4% from 2019.

Enterprise software spending shows the greatest gain (7.2%) in the 2021 global IT spending forecast. Then come data center systems (5.2%), followed by IT services (4.1%), devices (4%) and communication services (2.8%).

Gartner’s John-David Lovelock

“In the 25 years that Gartner has been forecasting IT spending, never has there been a market with this much volatility,” said John-David Lovelock, distinguished research vice president at Gartner. “While there have been unique stressors imposed on all industries as the ongoing pandemic unfolds, the enterprises that were already more digital going into the crisis are doing better and will continue to thrive going into 2021.”

Gartner predicts spending in all IT segments to decline this year. Devices take the brunt of the decline in spending with a 13.4% drop. And some more bad news: IT services spend is down, off 4.6%. Enterprise software is down 3.6%, data center systems off 3.1% and communication services falling 2.9%.

“The spending slowdown that took place from roughly April through August of this year, coupled with cloud service providers’ ‘try before you buy’ programs, is shifting cloud revenue out of 2020,” said Lovelock. “Cloud had a proof point this year — it worked throughout the pandemic; it scaled up and it scaled down. This proof point will allow for accelerated penetration of cloud through 2022.”

Cloud & Work-from-Home

The report’s author notes that cloud activity increased in 2020. That increase is due to the pandemic and the work-from-home rush. However, you won’t see it reflected in vendors’ revenue until 2021. An additional reminder is that enterprise cloud spending crosses multiple categories.

Looking at the 2021 IT spending rebound, Gartner first looks at the increase in enterprise spending. It is due to several factors. One factor: Enterprises are accelerating their digital transformation efforts to support a remote workforce. Other factors include the delivery of virtual services such as distance learning and telehealth, and leveraging hyperautomation.

Gartner attributes data center systems spending growth in 2021 to hyperscalers accelerating their global data center buildouts. Also, businesses will resume their data center expansion plans, the firm said.

The big-picture thinking is that bigger IT projects aimed at accelerating digital transformation plans will take precedent over spending on devices and communication services.