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SPECIAL REPORT

Lovelock: There is more to the recovery in 2018
than just currency effects

IT spending in EMEA to top $1trn in 2018: Gartner

DUBAI, 29 days ago

IT spending in EMEA (Europe, Middle East and Africa) is projected to total $1trillion in 2018, an increase of 4.9 per cent from estimated spending of $974 billion in 2017, according to a new report from research and advisory firm Gartner.

In 2017, however, all categories of IT spending in EMEA underperformed global averages. Currency effects played a big part in the weakness in 2017, and will also contribute to the strength forecast in 2018.

Gartner analysts will discuss the underlying trends that are driving IT spending patterns this week during the Gartner Symposium/ITxpo taking place in Dubai on March 5-8, 2018.

"The UK has EMEA’s largest IT market and its decline of 3.1 per cent in 2017 impacts the forecast heavily,” said John-David Lovelock, research vice president at Gartner. “Weak Sterling and political uncertainty since Brexit are reducing UK IT spending in 2017, while other major IT markets in EMEA grew steadily.”

Another significant currency effect is the rapid appreciation of the Euro against the US dollar— it provides an incentive for Eurozone countries to defer IT spending to 2018 where possible, in anticipation of even lower prices in US dollars.

"However, there is more to the recovery in 2018 than just currency effects,” added Lovelock. “Strong demand in the enterprise software and IT services categories across EMEA hint at significant shifts in IT spending patterns.”

“The forecast highlights that businesses are broadly reducing spending on owning IT hardware, and increasing spending on consuming IT as-a-service. In the total IT forecast the business trends are masked somewhat by consumer spending, but when we look at enterprise-only spending the new dynamics between the categories are much clearer.”

Significant shifts in enterprise IT spending

EMEA enterprise IT spending in 2017 was weaker than the overall IT spending forecast, declining 1.4 per cent. The only category predicted to show enterprise spending growth in 2017 is the enterprise software market at 3.2 per cent.

“In2017, we’re seeing a pause in EMEA enterprise spending due to the switch to as-a-service offerings gaining momentum,” said Lovelock. “Among the spending rebounds in 2018, however, we expect lagging markets. The data center, devices and communication services categories are all on pace to decline 3 per cent or more in 2017. Despite improvements in 2018, spending on servers, storage, network equipment, printers, PCs, mobile devices — and even hardware support — won’t recover to 2016 levels.”

In 2018, total enterprise spending in EMEA is on pace to grow 2.8 per cent. All categories of enterprise IT spending will return to growth in 2018, but only IT services and software will grow strongly at 4 per cent and 7.6 per cent, respectively. Enterprise spending on devices and communications services continues to fall behind in 2018, growing at 2 per cent or lower, thus failing to recoup the losses of 2017.

Gartner’s recent public cloud forecast further underlines this change in spending as businesses increasingly adopt cloud models for efficiency and agility. In doing so, they also shift their IT spending toward operational expenditure (opex) service-based models.

“The move to cloud services and opex spending on IT should serve to stabilize the growth in overall IT spending in EMEA in 2018 and beyond. We expect spending will spread out more evenly with fewer spikes of capital investment on hardware,” said Lovelock. “In both enterprise and overall IT spending forecasts, worldwide and in EMEA, we forecast IT spending from 2019 through 2021 will remain close to a 3 per cent growth rate each year.”

Gartner Symposium/ITxpo is a major gathering of CIOs and senior IT leaders, uniting a global community of CIOs with the tools and strategies to help them lead the next generation of IT and achieve business outcomes. More than 23,000 CIOs, senior business and IT leaders worldwide will gather for the insights they need to ensure that their IT initiatives are key contributors to, and drivers of, their enterprise's success. – TradeArabia News Service




Tags: Gartner | EMEA | IT Spending |

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