IT Spending Crawls but Cloud Spending Set to Race, Says Gartner

The economic turmoil in Europe, the slowdown in China and weak recovery in the United States has no doubt decreased the pace of IT spending. This has forced Gartner (News - Alert) to update its forecast once again. But, the picture is not as bleak as it appears.

On the face of it, a vulnerable economy does put a lot of pressure on IT budgets, and although IT spending will currently be much slower than the 7.9 percent gain in 2011, the plus point is that in spite of everything, Gartner still forecasts a three percent growth in 2012, which is 0.5 percent greater than what it projected three months ago.

Given the state of the economy in Europe, this increase, though rather modest, is still notable, not perhaps in fiscal terms, but by its very nature.

Interestingly, according to the research firm, the growth in IT spending is riding largely on the strength of increased spending on cloud computing and the 'silver lining' is that the strong appetite for cloud computing promises to drive enterprise spending on cloud services from $109 billion in 2012 to $207 billion by 2016.

Worldwide spending on IT services is supposed to increase by 2.3 percent and reach $864 billion and Gartner says that consulting services will be in greater demand because of the rise in analytics and big data.

Richard Moore, Gartner Analyst, observed that cloud-based business process software will account for the bulk of cloud spending by enterprises, followed by Platform- as- a- Service, Software- as- a- Service and Infrastructure- as- a- Service.

An increase in net connections, especially in emerging markets, and the adoption of multiple connected devices in the mature markets is expected to ensure a growth in telecom services, pegged by Gartner at $1.686 trillion.

Gartner has also revised its forecasts on IT spend worldwide in areas like hardware and software. Hardware is expected to be up by 3.4 percent in 2012 and enterprise software up by 4.3 percent, as obsolete systems are replaced by cloud-based solutions and newer software.

It appears then, that notwithstanding the Eurozone crisis, the 'outlook' is not entirely cheerless. However, Gartner noted that with 'plateau' business confidence and consumer sentiment in the last quarter, companies need to exercise caution in IT spending.

TMCnet reported that although large enterprises certainly invest their fair share in IT, small- and medium-sized businesses (SMBs) are leading the charge in IT spending – from security products to cloud computing, they are in making investments in critical solutions, as well as technologies that will enable them to enhance productivity.

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