Gartner, a leading research firm, has revised its outlook for 2024 IT spending growth, citing that the emergence of generative artificial intelligence (GenAI) software is unlikely to have a significant effect on the industry. Despite the technology sector's increasing focus on AI, Gartner now expects worldwide spending on information technology to only increase by 6.8% this year, down from the previous forecast of 8% growth. This adjustment is attributed to what the research firm refers to as "change fatigue" among IT managers.
However, Gartner's forecast still indicates an improvement over the previous years, with anticipated growth rates of 3.3% in 2023 and 3% in 2022. Nevertheless, the IT spending environment remains constrained due to "change fatigue." This constraint may manifest as CIOs hesitating to enter into new contracts, commit to long-term initiatives, or collaborate with new technology partners.
According to Gartner, CIOs now demand higher levels of risk mitigation and greater certainty of outcomes for the new initiatives they launch. While GenAI is expected to revolutionize various aspects of technology, Gartner analyst John-David Lovelock stresses that its impact on IT spending will be relatively insignificant. He draws parallels between the GenAI trend and previous waves of technology, such as the Internet of Things and the rise of blockchain.
IT Spending Trends in 2024
According to industry analyst firm Gartner, the year 2024 is set to be a turning point for organizations as they prioritize planning for the utilization of GenAI technology. However, traditional factors like profitability and labor will continue to drive IT spending, while a sense of change fatigue may impede its growth.
IT Services Take the Lead
With an anticipated growth rate of 8.7%, the largest category of spending this year will be IT services, reaching a whopping $1.50 trillion. This represents a significant acceleration from the 5.8% growth experienced in the previous year.
This surge in IT service expenditure is expected to surpass spending on communications services, which has historically held the highest position among enterprise tech spending categories. Communications services are predicted to grow by 2.3%, reaching $1.47 trillion, as compared to a 1.5% increase observed last year.
Device Sales and Software Investment
Gartner forecasts a remarkable growth rate of 12.7% in device sales for this year, reaching $1 trillion. Additionally, spending on software is projected to rise by 4.6% to $732 billion, effectively reversing the 8.7% decline witnessed in 2023. Moreover, there is expected to be a 7.5% increase in spending on data center systems, totaling $261 billion.
Importance of Organizational Efficiency
Contrary to expectations, Gartner suggests that the substantial growth in IT services spending does not primarily stem from an increased utilization of artificial intelligence (AI). Instead, investments in "organizational efficiency" and optimization projects are driving this surge.
In conclusion, while 2024 will witness a significant focus on harnessing the potential of GenAI, organizations will continue to allocate their IT spending according to traditional forces such as profitability and labor. The growth in IT services spending will be accompanied by enhanced investment in devices, software, and data center systems.
