In a recent update, Gartner, Inc. has downward adjusted its 2023Q4 forecast for worldwide IT spending in 2024, revising the anticipated growth rate from 8% to 6.8%. Despite this revision, the industry is still projected to exceed $5 trillion in spending, and marks a considerable increase from the 3.3% growth observed in 2023.
A key factor offered in the Gartner reforecast is the concept of change fatigue, particularly among Chief Information Officers (CIOs) and technology leaders. More on that in a bit.
Shifting Dynamics in IT Spending
For the first time, IT services are expected to become the largest segment of IT spending. The sector is predicted to grow by 8.7% to $1.5 trillion, driven largely by enterprises investing in projects aimed at enhancing organizational efficiency and optimization, particularly crucial during periods of economic uncertainty.
The communications services segment, traditionally a dominant force, is anticipated to experience a relatively modest growth of 2.3%, reaching $1.47 trillion. This change reflects a broader shift in the industry, where enterprises are finding increasingly diverse applications for technology across various facets of their operations.
The Role of Generative AI and Traditional Drivers
Contrary to the explosive impact of trends like blockchain and IoT in their nascent stages, generative AI (GenAI) is not expected to significantly alter IT spending patterns in the short term. Nevertheless, 2024 is poised to be a pivotal year for organizations to plan for GenAI’s deployment.
Gartner emphasizes that more conventional factors such as profitability and labor will primarily fuel the growth in IT spending.
Devices and Software Segments: A Resilient Comeback
The devices segment is set to resume its upward trajectory with a projected increase of 4.6%, rebounding from a nearly 9% decline in 2023. This revival is indicative of the sector’s resilience and its ability to adapt to changing market dynamics.
Similarly, the software segment is forecasted to witness a substantial 12.7% growth, reaching over $1 trillion. This growth aligns with the increasing reliance on digital solutions across industries and the continuous evolution of software technologies.
Cautions and Challenges: The Specter of Change Fatigue
Despite the positive forecast, Gartner warns of potential hurdles. A key factor in this revised forecast is attributed to the concept of “change fatigue” among Chief Information Officers (CIOs) and technology leaders. This concept refers to the reluctance to sign new contracts, commit to long-term initiatives, or invest in new technologies due to the pace of technological advancement and complexities that can overwhelm decision-makers.
However, attributing the revised forecast solely to change fatigue is challenging. This is because change fatigue is a subjective, qualitative factor that is difficult to measure directly. Its influence on IT spending trends, therefore, remains a nuanced and complex issue, intersecting with various other economic and technological factors.
The Wrap
As the global IT spending crosses the $5 trillion threshold, 2024 is shaping up to be a dynamic and transformative year for technology leaders. This period marks a significant phase in the IT sector, characterized by both steady growth and the potential for groundbreaking advancements. Traditional drivers of growth such as profitability and labor efficiency continue to play a vital role, but the landscape is being progressively reshaped by emerging technologies like generative AI.
The concept of change fatigue, while recognized, is not a deterrent in this environment of rapid evolution and opportunity. The pace of change in the IT industry demands agility and forward-thinking, leaving little room for hesitation or resistance. This is a time for action and innovation, a period where technology leaders must embrace the challenges and harness the potential of new technologies.
Change fatigue? Nah – there is no time for it. Its time to press on. We’ve got work to do.
