SaaS and AI to drive global IT spending to $3.7 trillion in 2018: Gartner report

Organisations’ spending patterns will change and move towards blockchain, machine learning, IoT, etc., until 2021.

Global IT spending is estimated to grow to $3.7 trillion in 2018, says Gartner in a new forecast. This is a 4.5 percent growth over 2017 and much of it would be driven by investments in digital transformation, blockchain, machine learning, artificial intelligence (AI), and internet of things.

Organisations are expected to increase spending on enterprise application software in 2018, with more of the budget shifting to software as a service (SaaS). “The growing availability of SaaS-based solutions is encouraging new adoption and spending across many subcategories, such as financial management systems (FMS), human capital management (HCM), and analytic applications,” Gartner said.

AI will be the key driver of new business opportunities until 2021, with $2.9 trillion dedicated to it. Gartner had stated in a December 2017 report that AI will create 2.3 million jobs around the world while it will eliminate 1.8 million of them. “The number of jobs affected by AI will vary by industry; through 2019, healthcare, the public sector and education will see continuously growing job demand while manufacturing will be hit the hardest. Starting in 2020, AI-related job creation will cross into positive territory, reaching two million net-new jobs in 2025,” it stated.

Heavy investments in AI is expected to recover 6.2 billion hours of worker productivity. It will drive large-scale system efficiencies and help organisations offer highly personalised customer experiences. “Spending on AI for customer experience and revenue generation will likely benefit from AI being a force multiplier — the cost to implement will be exceeded by the positive network effects and resulting increase in revenue,” said John-David Lovelock, Research Vice President at Gartner.

The devices segment, which recovered in 2017 after a two-year slump, is projected to grow 5.6 percent in 2018. While PC growth will remain flat through the year, end-user spending on mobiles is expected to go up. Overall smartphone units shipped might be lower than 2017, especially in the mature markets where upgrade cycles are slower, higher per unit spending will ensure growth in the overall devices market. “iOS shipments are expected to grow 9.1 percent in 2018,” revealed Gartner.

IT spending could, however, be subject to macro-economic factors like Brexit, currency fluctuations, and a possible global recession. “Despite this uncertainty, businesses will continue to invest in IT as they anticipate revenue growth, but their spending patterns will shift,” Lovelock stated.