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January 18, 2017

Worldwide IT Spend Hampered by Politics

It's almost getting to the point where a report of decreased spending on information technology (IT) would come as the biggest of shocks. Most of us expect more spending on IT and accompanying infrastructure. That's why the latest Gartner (News - Alert) report of a 2.7 percent increase isn't much of a surprise at all. However, it's much more of a surprise to note that that increase is down from what it was projected to be earlier.

The earlier projections said that the rate of increase would be more around 3 percent. While that still brings us up to a staggering $3.5 trillion for 2017, it's still less than was earlier projected. The biggest reason behind the drop-off is political uncertainty, Gartner research vice president John-David Lovelock noted. While no amount of political uncertainty can stop IT investing altogether—there are simply too many new options out there to pass on entirely—there are some things that may be more necessary than others.

Device spending is expected to be mostly static, though 2018 is expected to be a big year for devices as replacement cycles should start to kick in then. Concerns about the market and the geopolitical situation may temper this, however. IT services are poised for 4.2 percent growth, though here too politics may play a role in slowing growth somewhat. Some clear standouts include the global server market, expected to see 5.6 percent growth as firms like Amazon, Google and Microsoft (News - Alert) build out cloud computing presences.

Lovelock offered further comment, noting, “Normally, the economic environment causes some level of division, however, in 2017 this is compounded by the increased levels of uncertainty. The result of that uncertainty is a division between individuals and corporations that will spend more—due to opportunities arising—and those that will retract or pause IT spending.”

Certainly, some level of pause is worthwhile. Based on early projections, a Trump presidency will gut almost eight years of Obama-era executive orders and regulations. Why spend a fortune on hardware and software required to satisfy regulations that don't exist anymore? Further, if Trump's tariff plans go through, any imported hardware will be substantially more expensive.  Stepping back on these points will be worthwhile, as no one knows just yet how the plans have to be modified according to conditions on the ground. I'm not sure it will take the whole year as Gartner projects, but at least six months, and that delay may be enough to drag on the overall percentage of sales.

Big changes are ahead, there's no doubt of that, and IT won't be any exception here. Old regulations gone, new regulations arriving, all of this proving that the only real constant is change. 

Edited by Alicia Young

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