Tuesday, 07 January 2014 16:38

IT spending to rebound – a bit – in 2014

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IT spending in the Asia Pacific region is forecast to reach US$758 billion in 2014, up 4.2% from 2013. This is slightly lower than 2013 growth of 4.7%.

Analyst group Gartner says that total Australian IT spending will reach A$76.9 billion, an increase of 2.54% over 2013. New Zealand’s total IT spending is forecast to grow 2.2% to reach NZ$11.1 billion.

Worldwide IT spending is projected to total US$3.8 trillion in 2014, a 3.1% increase from 2013 spending of US$3.7 trillion.

In 2013, the market experienced flat growth, growing 0.4% year over year. Spending on devices (including PCs, ultramobiles, mobile phones and tablets) contracted 1.2% in 2013, but it will grow 4.3% in 2014.

Gartner analysts said convergence of the PC, ultramobiles (including tablets) and mobile phone segments, as well as erosion of margins, will take place as differentiation will soon be based primarily on price instead of devices' orientation to specific tasks. Enterprise software spending growth continues to be the strongest throughout the forecast period. The 2014 annual growth rate is expected to grow 6.8%.

Customer relationship management (CRM) and supply chain management (SCM) experienced a period of strong growth. “Investment is coming from exploiting analytics to make B2C processes more efficient and improve customer marketing efforts. Investment will also be aligned to B2B analytics, particularly in the SCM space, where annual spending is expected to grow 10.6% in 2014,” said Gartner’s Richard Gordon.

“The focus is on enhancing the customer experience throughout the presales, sales and post sales processes.” Though growth in2014 is forecast to be up on 2013, it has been revised down a little. Last quarter, Gartner's forecast for 2014 IT spending growth in US dollars was 3.6%, a 0.5 percentage points higher than the current forecast.

"A downward revision of the 2014 forecast growth in spending for telecom services — a segment that accounts for more than 40% of total IT spending — from 1.9% to 1.2% is the main reason behind this overall IT spending growth reduction," said Gordon.

"A number of factors are involved, including the faster-than-expected growth of wireless-only households, declining voice rates in China and a more frugal usage pattern among European customers. The latter coincides in Western Europe with a breakout of fierce price competition among communications service providers to retain customers and attract new ones.

“The data centre systems spending growth outlook for 2014 has been cut from 2.9% in our previous forecast to 2.6%. This is mainly due to a reduction in the forecast for external controller-based storage and enterprise communications applications.

"These segments represent 32% of total data centre system end-user spending.” Gartner has also slightly revised downward the IT services compound annual growth rate between 2012 and 2017. The largest contributor to this revision comes from reductions in IT outsourcing — specifically, in colocation, hosting and data centre outsourcing growth rates.

"We are seeing CIOs increasingly reconsidering data centre build-out and instead planning faster-than-expected moves to cloud computing. Despite these small reductions, we continue to anticipate consistent 4-5% annual growth through to 2017," said Gordon..


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Graeme Philipson

Graeme Philipson sadly passed away in Jan 2021 and a much valued senior associate editor at iTWire. He was one of Australia’s longest serving and most experienced IT journalists. He is the author of the only definitive history of the Australian IT industry, ‘A Vision Splendid: The History of Australian Computing.’He was in the high tech industry for more than 30 years, most of that time as a market researcher, analyst and journalist. He was founding editor of MIS magazine, and is a former editor of Computerworld Australia. He was a research director for Gartner Asia Pacific and research manager for the Yankee Group Australia. He was a long time weekly IT columnist in The Age and The Sydney Morning Herald, and is a recipient of the Kester Award for lifetime achievement in IT journalism. Graeme will be sadly missed by the iTWire Family, Readers, Customers and PR firms.

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