Gartner says IT spending in Australia to reach almost A$85 billion in 2017 as the battle for the digital platform begins

Via Gartner Newsroom

Oct 25, 2016

GOLD COAST, Australia, October 25, 2016

Analysts Examine the Next Evolution of Digital Business during Gartner Symposium/ITxpo 2016 on the Gold Coast, Australia, October 24-27

Total IT spending in Australia is forecast to reach almost A$85 billion in 2017, a 2.8 percent increase from 2016, as organizations build out their digital platform, according to Gartner, Inc. In New Zealand, IT spending is forecast to surpass NZ$11.5 billion, a 2.4 percent increase from 2016.

Globally, IT spending will be driven by growth in software and IT services revenue and is forecast to reach $3.5 trillion in 2017, up 2.9 percent from 2016 estimated spending of $3.4 trillion, according to the latest forecast by Gartner, Inc.

The bright spot for the Asia/Pacific region has also been the software and IT services segments. Software spending is projected to grow 6.4 percent in 2016, and it will grow another 10.2 percent in 2017 to total $35.6 billion (see Table 1). IT services spending is on pace to grow 2.9 percent in 2016 to reach $93 billion, and increase 4.1 percent in 2017 to reach $98.8 billion.

Table 1. Asia/Pacific IT Spending Forecast (Billions of U.S. Dollars)

- 2016 Spending 2016 Growth (%) 2017 Spending 2017 Growth (%)
Data Center Systems 36,157 4.1% 37,863 4.7%
Software 35,692 6.4% 39,344 10.2%
Devices 204,989 -7.4% 210,884 2.9%
IT Services 93,216 2.9% 98,809 6.0%
Communications Services 350,234 0.0% 364,716 4.1%
Overall IT 720,288 -1.4% 751,617 4.3%

Source: Gartner (October 2016)

Speaking to an audience of more than 1,500 CIOs and IT leaders at Gartner Symposium/ITxpo on the Gold Coast today, Peter Sondergaard, senior vice president and global head of Research at Gartner, said that every organization needs a digital platform strategy.

The battle for ownership of digital platforms, where networks of stakeholders bring value to each other, has begun, said Mr. Sondergaard. The good news is that theres incredible opportunities for those companies that innovate, lead and ultimately succeed in the creation of new digital platforms that meet their customers needs better than their competitors. The bad news for those hearing about this seismic shift for the first time is, basically, youre already a long way behind.

Not every organization should assume a leadership role in a business ecosystem; however, CIOs must collaborate with their business counterparts to integrate digital platform development into their technology and business strategic planning, said Mr. Sondergaard.

CIOs will participate in the building of a new digital platform with intelligence at the center, Mr. Sondergaard said. That platform will enable ecosystems, connecting businesses and collapsing industries. It will change society itself, and the way people live.

This new digital platform that extends beyond traditional IT infrastructure using new technologies not familiar to the typical IT department. Your new digital platform will allow you to participate in the evolving world of business, government, and consumer ecosystems because ecosystems are the next evolution for digital. Its how you compete at scale, Mr. Sondergaard said.

The new digital platform consists of five domains: traditional IT systems, customer experience, the Internet of Things (IoT), intelligence and the ecosystem foundation.

Each of these domains are interconnected and interdependent. All have a role, and all are required, Mr. Sondergaard said. Your new digital platform will allow you to participate in the evolving world of business, government, and consumer ecosystems. Because ecosystems are the next evolution for digital. Its how you compete at scale.

Gartner analysts are discussing the key IT and business issues that are driving the evolution of digital business this week during Gartner Symposium/ITxpo here through Thursday. There has been interest among attendees regarding the impact of the UKs exit from the European Union, known as Brexit, and the upcoming U.S. presidential election will have on IT investment.

The immediate impact of Brexit has caused modest growth in IT spending to turn negative for 2016, said John-David Lovelock, research vice president at Gartner. Without the U.K., global IT spending growth would have been modestly positive at 0.2 percent in 2016, but with the U.K. included, IT spending is expected to decrease 0.3 percent. The immediate impact of the British pound will also cause the IT spending patterns to shift as prices for IT will increase.

Companies will be monitoring negotiations closely, and there will be some changes in IT investment. For example, in financial services, analysts expect to see some countries in Europe put more investment in IT to offer a more viable option for EU countries than the U.K.

We are seeing, for example, banks in talks with these countries to examine the possibility of moving their operations outside of the U.K., Mr. Lovelock said.

The U.S. presidential election is two weeks away. Gartner analysts do not believe the pending election, or the winning candidate, will affect IT spending trends.

We have also taken into account the U.S. presidential race, as well as a potential rate cut by the Federal Reserve. Typically, there is a slight pause in IT spending leading into the election, and then a relief in spending, subsequently. However, trends have shown that IT spending in the U.S. is not dependent on presidential leadership, so neither candidate should have a significant impact on IT spending in the near-term.

More detailed analysis on the outlook for the IT industry is available in the complimentary webinar on demand, IT Spending Forecast, 3Q16 Update: Impacts of Brexit Not Limited to the U.K. During the webinar, Gartner analysts discuss the effects that Brexit is having on global IT spending.

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.

The Gartner quarterly IT spending forecast delivers a unique perspective on IT spending across hardware, software, IT services and telecommunications segments. These reports help Gartner clients understand market opportunities and challenges. The most recent IT spending forecast research is available at Quarterly IT Spending Forecast page includes links to the latest IT spending reports, webinars, blog posts and press releases.

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