KUALA LUMPUR (April 7): Global IT spending is projected to rise 4% year-on-year in 2022 to US$4.4 trillion (about RM18.56 trillion), according to technology and consulting firm Gartner Inc.

In a statement on Wednesday (April 6), Gartner distinguished research vice-president John-David Lovelock said this year is proving to be one of the noisiest years on record for chief investment officers (CIOs).

“Geopolitical disruption, inflation, currency fluctuations and supply chain challenges are among the many factors vying for their time and attention, yet contrary to what we saw at the start of 2020, CIOs are accelerating IT investments as they recognise the importance of flexibility and agility in responding to disruption.

“As a result, purchasing and investing preference will be focused in areas including analytics, cloud computing, seamless customer experiences and security,” he said.

Gartner said inflation impacts on IT hardware (e.g. mobile devices and PCs) from the past two years are finally dissipating and starting to spill over into software and services.

It said with the current dearth of IT talent prompting more competitive salaries, technology service providers are increasing their prices, which is helping to increased spending growth in these segments through 2022 and 2023.

The firm said software spending is expected to grow 9.8% to US$674.9 billion in 2022, while IT services are forecast to grow 6.8% to reach US$1.3 trillion.

Gartner said the rise of enterprise application software, infrastructure software and managed services in the near and long term demonstrates that the trend towards digital transformation is not a one- or two-year trend as it is systemic and long-term.

It said that for example, infrastructure as a service (IaaS) underpins every major consumer-focused online offering and mobile application, accounting for a significant portion of the almost 10% growth in software spending estimated for 2022.

Gartner expects digital business initiatives such as experiential end-consumer experience and optimisation of the supply chain to push spending on enterprise applications and infrastructure software into a double-digit growth in 2023.

The firm said the Russian invasion of Ukraine is not expected to have a direct impact on global IT spending.

It said price and wage inflation compounded with talent shortages and other delivery uncertainties are expected to be greater impingements on CIOs’ plans in 2022 but will not slow down technology investments.

Lovelock said CIOs anticipate having the financial and organisational ability to invest in key technologies throughout this year and next.

“Some IT spending was on hold in early 2022 due to the Omicron variant [of Covid-19] and subsequent waves but is expected to be cleared in the near term.

“CIOs who keep their eye focused on key market signals, such as the shift from analog to digital business and buying IT to building it, as well as negotiate with their vendor partners to assume ongoing risks, will fare better in the long term.

“At this point, only the most fragile companies will be forced to pivot to a cost-cutting approach in 2022 and beyond,” he said.

Worldwide IT spending forecasts (millions of US dollars)

Source: Gartner (April 2022)