IT Spend To Grow 2 Percent In 2013: Report

Worldwide IT spending is expected to increase about 2 percent in 2013 compared to last year and total approximately $3.7 trillion, according to Gartner's latest forecast.

The updated 2.1 percentage point reduction from Gartner's original forecast last quarter, according to the firm's press release, is reflective of recent fluctuations in U.S. currency exchange rates.

Richard Gordon, research vice president at Gartner, said in a press release Tuesday that the movements in exchange rates and a lowered 2013 forecast for spending in devices account for most of the lowered growth estimates for this year.

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"Stripping out the impact of exchange rate movements, the corresponding constant currency growth figures [for 2014 and this year] are 5.4 percent and 3.5 percent, respectively," Gordon wrote in an email to CRN. "Compared with the previous quarter's forecast, constant currency growth for 2013 has been revised down by 0.5 percent, which means that much of the 2.1 percent reduction in the dollar-valued growth forecast reflects foreign exchange rate depreciations against the dollar."

Business executives often use Gartner's forecasts to help identify emerging market opportunities and potential obstacles in the IT market as well as major trends in the tech industry. At the moment, Gordon told CRN, "four key forces" are driving tech investment: social media, cloud, information like big data and mobility. "Those four things are really where all of the action is," Gordon said.

Allen Falcon, CEO of Cumulus Global, a Westborough, Mass.-based solution provider, said he agrees with Gordon's assessment. "That’s what we're seeing in demand with our customers," Falcon said. "Our market is more small and midsize businesses, so the cloud and mobility are coming at the top half of that [and] big data is really at the bottom."

Dave Monk, CEO of ArcSource Consulting, a Berkeley, Calif.-based consulting firm and Google Apps VAR, said the primary driver of current tech spending is deferred spending. "What I'm seeing is deferred spending in all categories from the slowdown of the last couple of years," Monk said. "People are buying it now because they should've bought it two years ago."

According to Gartner's latest findings, the IT area expected to see the most growth in spending this year is enterprise software -- predicted to grow 6.4 percent.

As digital content creation and operating systems become software as a service and mobile devices change traditional business models, customer relationship management (CRM) systems are expected to grow as they expand into e-commerce and other enterprise platforms, according to Gartner's report.

In the enterprise market, Gordon said CRM software is currently the main driver. "Within enterprise software is where we're seeing quite strong growth right now," Gordon said. "Businesses are trying to understand all the new influencers out in the market ... and the amount of information coming in."

NEXT: Device Trends

The devices market of PCs, tablets and smartphones is also expected to catch up to enterprise software in terms of growth by 2014, with the two almost in line at 6.5 and 6.6 percent, respectively.

In a recent report, Gartner predicted mobile device shipments would soon catch up with those of desktop PCs and laptops. In Tuesday's report, the tech research firm estimated that device spending will reach $740 billion in 2014 -- 50 billion more than this year -- and continue to be the third highest source of tech spending, behind telecom and IT services.

"The most interesting thing right now is what's going on in the devices market," Gartner's Gordon said. "The traditional PC market is in quite rapid decline because, consumers particularly, are shifting their buying preference toward these more mobile devices."

Falcon of Cumulus Global said several numbers from Gartner's report indicate that people may be moving away from traditional PCs. "Clearly the increase in telecom services is confirmation of the expanded use of mobility solutions," Falcon said, citing Internet and remote connectivity as industry examples. "That's in-line with what we've seen of companies shedding infrastructure for cloud computing and hosted services."

However, since the device area is still shifting, it remains vulnerable to change and hard to predict, Gordon said. "Last year, for example, the smartphone market was very strong, but this year we're seeing that go down a little bit," Gordon said. "We're seeing changes in mobile operating systems that allow people to use their device longer, which pushes out the replacement cycle."

Within ArcSource's local market, Monk said he has noticed a rise in tech spending. "As an IT person, I'm glad for any growth," Monk said. "My intuition is that the number is considerably larger than two percent, at least among my customers."

PUBLISHED JULY 2, 2013