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March 27, 2017

Technology Purchasing Sees Shakeup in Organizations

It was supposed to be so simple, a lot of managers are likely moaning into their coffee on a Monday morning. Information technology (IT) departments purchased technology, then installed it and maintained it while everyone else did the things those departments were supposed to do on those systems. As a new report from International Data Corporation (IDC (News - Alert)) reveals, though, the reality is likely to be much different for at least the next few years.

The IDC update to the Worldwide Semiannual IT Spending Guide: Line of Business report reveals that there will be quite a bit more IT spending made by non-IT business units. In 2017, that number will reach a hefty $609 billion, which is up 5.9 percent from 2016's figures. Indeed, that 5.9 percent figure will factor in elsewhere, as the compound annual growth rate (CAGR) of such spending is set to hit 5.9 percent through to 2020. By comparison, similar technology spending at the IT level is only expected to grow at a CAGR of 2.3 percent.

This is a development that will shock many, at least until what goes into these numbers is considered. Three major sources of spending will drive line of business spending in 2017, the report notes, including applications at $150.7 billion, project-oriented services at $120.3 billion, and outsourcing at $70.3 billion. Add these all together and we see that just over $341 billion of that projected spend is going into three big areas. By comparison, IT buying will focus on outsourcing at $149.2 billion, project-oriented services at $82.2 billion and support and training services at $79.8 billion.

What's particularly interesting here is the potential for overlap involved; with both line of business and IT units set to spend heavily on outsourcing and project-oriented services, it's not out of line to think there might be some redundancy going forward, though both divisions will likely be spending in different directions. There's also an interesting deviation in there as line of business is set to spend heavily on apps, though that's not out of line; it's reasonable to think that the line of business field knows what it needs and is ready to buy it, though that can make for some security headaches later on.

We're seeing a market shape up where IT is no longer the sole gatekeeper of software and hardware used at a company. That's an unnerving though reasonable change; business knows what it needs. Though there are problems inherent in such a plan, it might be time to realize that those who actually are in the trenches are best suited to know what tools are needed to carry on the fight.




Edited by Alicia Young
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