Aussie tech spend to pass $100bn in next two years

Australian technology spend is expected to pass the $100bn mark over the next two years, according to Gartner.

In its latest industry spending report, the global consulting firm said Aussie tech spending for 2019 will be over $93.8bn, up 3.1 per cent from last year with the industry expected to earn $107bn in 2022.

Driving the spending growth were software purchases, with a 12 per cent jump last year to $34.4bn, along with IT services which saw a 5 per cent gain to $16.9bn.

Over the next three years, Gartner forecasts the two sectors will grow 38 per cent and 14 per cent to $39.3bn and $23.2bn respectively.

Spending on technology by segment, Australia, 2018-2022 (Millions of Australian dollars)

Source: Gartner (July 2019)

The hardware sector was not so fortunate with spending on devices slumping 5 per cent last year while data centre expenditure fell 4 per cent. Gartner sees the two segments barely moving over the longer term with devices picking up 2 per cent by 2022 while data centres remain flat.

Driving the spending shift away from data centres is the continued global move to cloud services said John-David Lovelock, Research Vice President at Gartner.

“Spending in old technology segments, like data centres, will only continue to be dropped,” he said.

Similarly, the devices market has a weak outlook as customers extend the operational life of their hardware as processes shift to the cloud, Gartner reported.

“There are hardly any ‘new’ buyers in the devices market, meaning that the market is now being driven by replacements and upgrades,” observed Lovelock.

“Add in their extended lifetimes along with the introduction of smart home technologies and IoT, and consumer technology spending only continues to drop.”

Worldwide IT spending forecast (Billions of US dollars)

Source: Gartner (July 2019)

Globally, Gartner said worldwide tech spending is projected to total US$3.74 trillion in 2019, an increase of 0.6 per cent from 2018, slightly down from the previous quarter’s forecast of 1.1 per cent growth.

“Despite uncertainty fuelled by recession rumours, Brexit, trade wars and tariffs, we expect IT spending to remain flat in 2019,” said Lovelock. “While there is great variation in growth rates at the country level, virtually all countries tracked by Gartner will see growth in 2019.

"Despite the ongoing tariff war, North America IT spending is forecast to grow 3.7 per cent in 2019 and IT spending in China is expected to grow 2.8 per cent.”

“Although an economic downturn is not the likely scenario for either 2019 or 2020, the risk is currently high enough to warrant preparation and planning.

"Technology general managers and product managers should plan out product mix and operational models that will optimally position product portfolios in a downturn should one occur,” said Lovelock.