IT Spending Expected to Drop in 2016

 
 
By Dennis McCafferty  |  Posted 07-12-2016 Email
 
 
 
 
 
 
 
 
 
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    IT Spending Expected to Drop in 2016
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    IT Spending Expected to Drop in 2016

    The spending outlook does not translate to any halt in digital initiatives, but it does mean CIOs will need to revise spending models.
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    Spending Slip
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    Spending Slip

    Overall IT spending totaled just more than $3.5 trillion in 2015, down 6% from the year before.
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    Leveling Off
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    Leveling Off

    Overall IT spending is projected to decrease to about $3.49 trillion this year, down .5% compared to 2015.
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    Hard Fall
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    Hard Fall

    Communications services spending declined to $1.47 trillion this past year, down 8.4% from 2014.
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    Dangling Conversation
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    Dangling Conversation

    The communications services market is expected to fall to $1.44 trillion in 2016, down 1.2% this year.
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    Service Decline
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    Service Decline

    IT services spending dropped to $910 billion in 2015, down 4.7% from the year before.
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    On the Uptick
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    On the Uptick

    The IT services market is forecasted to grow to $929 billion this year, up 2.1% from 2015.
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    Hardware Hard Times
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    Hardware Hard Times

    Device spending declined to $650 billion in 2015, a drop of 6.4% from the year before.
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    Device Overload
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    Device Overload

    Device spending will further decline to $626 billion this year, down 3.7% from 2015.
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    Soft Thud
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    Soft Thud

    Software spending declined to $308 billion last year, a drop of 1.9% from 2014.
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    Developing Trend
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    Developing Trend

    Software spending is projected to increase to $321 billion this year, up 4.2% from 2015.
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    Data-Driven, Part I
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    Data-Driven, Part I

    Spending on data center systems reached $171 billion last year, up 2.9% from 2014.
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    Data-Driven, Part II
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    Data-Driven, Part II

    The data center systems market is expected to increase to $175 billion in 2016, up 2.1% from 2015.
 

Overall IT spending is forecast to decline slightly this year compared to IT spending in 2015, according to Gartner. Currency fluctuations primarily account for the anticipated dip, as well as lingering reservations about the global economy in general. In addition, the smartphone market is approaching saturation, Gartner reports, while a slowdown in China’s growth is eroding spending on fixed voice services. The sobering outlook does not, however, translate to any halt in digital initiatives on the part of enterprises. But it does mean CIOs and other leaders will need to revise spending models, such as the redirecting of savings from legacy system optimization to fund these new initiatives, to support continued innovation. “An undercurrent of economic uncertainty is driving organizations to tighten their belts, and IT spending is one of the casualties,” said John-David Lovelock, research vice president at Gartner. “Concurrently, the need to invest in IT to support digital business is more urgent than ever. Business leaders know that they need to become digital businesses or face irrelevance in a digital world. To make that happen, leaders are engaging in tough cost optimization efforts in some areas to fund digital business in others.” (Note to readers: Spending percentage increases/decreases noted here sometimes do not literally reflect the actual spending numbers cited due to the rounding off of those numbers.)

 
 
 
 
 
Dennis McCafferty is a freelance writer for Baseline Magazine.

 
 
 
 
 
 

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