Demand for IT is expected to be strong in 2023, resulting in a 5.1% increase in IT spending as organizations look to continue digital business initiatives in response to economic uncertainty, according to a new Gartner forecast.
In fact, the IT research and consulting firm says enterprise IT budgets will be recession proof as executives look to increase IT investments rather than cutting budgets. According to the firm’s survey of 200 chief financial officers, nearly 70% plan to increase spending on digital technologies.
Worldwide IT budgets are expected to hit $4.6 trillion, with much of that 5.1% projected growth fueled by an 11.3% increase in software spending, boosting that category to a total of nearly $880 billion.
Highlighted by Gartner, spending on data center systems is projected to rise 3.4% to $216 billion as organizations continue to maintain existing on-premises data centers, but the large rise in software expenditures reflects a continued shift to cloud options.
Also fueling the overall increase is a projected increase in technology services spending of nearly 8%, bringing spending in that category to nearly $1.4 billion.
Conversely, spending on devices is expected to fall for a second straight year, with the projected 740 billion in spending on devices representing a 0.6% decrease after falling 8.4% last year. This comes after spending on devices increased by 15.8% as the pandemic fueled a rise in remote work and necessary devices.
Organizations plan to use new technology investments to reshape their revenue stream, add new products and services and change the cash flow of existing products and services. In addition, organizations plan to change the value proposition of existing products and services, says John-David Lovelock, a distinguished vice president analyst at Gartner.
“This trend has fed the shift from buying technology to building, composing and assembling technology to meet specific business drivers,” Lovelock says. “This shift is foundational to the growth of cloud over on-premises for new IT spending.”
“However, as organizations look to also realize operations efficiency, cost reductions and/or cost avoidance during the current economic uncertainty, more traditional back-office and operational needs of departments outside IT are being added to the digital transformation project list,” he adds.
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