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Australian IT spending to hit $98B in 2020

Australian IT spending to hit $98B in 2020

Australian IT spending remains ahead of global growth predictions

Credit: ID 3328990 © Yong hian Lim | Dreamstime

Australia is expected to spend $93.7 billion on IT products and services in 2019, a three per cent increase on last year, and will rise a further 4.6 per cent in 2020 to $98 billion, according to analyst firm Gartner.

Most of the money will be put towards IT services ($34.4 billion); communication services ($26.9 billion); software ($16.9 billion), devices ($12.6 billion) and data centre systems ($3 billion).

Meanwhile IT product and services spending in New Zealand is expected to reach NZ$13.4 billion in 2019, 2.3 per cent higher than last year, and is predicted to grow 3.6 per cent to $13.9 billion in 2020.

Specifically, New Zealand’s 2019 spending includes NZ$5 billion towards communication services, NZ$4 billion on IT services, NZ$2.2 billion on software, NZ$1.9 billion on devices and NZ$381 million on data centre systems.

However, global figures are increasing at a much slower pace with global IT spending forecast to reach US$3.7 trillion in 2019, an increase of only 0.4 per cent from 2018 figures. But that is expected in rebound in 2020 to about 3.7 per cent growth reaching US$3.9 trillion, mainly due to enterprise software spending. 

“The slowdown in IT spending in 2019 is not expected to stretch as far into 2020 despite concerns over a recession and companies cutting back on discretionary IT spending,” Lovelock said.

The breakdown of the global IT spending for 2019 includes US$1.4 trillion on communication systems, US$1 trillion on IT services, US$675 billion on devices, US$457 billion on enterprise software and US$205 billion on data centre systems.

Of this breakdown, the device market is expected to see the largest decline, dropping 5.3 per cent from 2018 but is expected to bounce back slightly with growth of 1.2 per cent in 2020, Gartner said.

“Similar to how consumers have reached a threshold for upgrading to new technology and applications, technology general managers and product managers should invest only in the next generation of products that will push them closer to becoming a true technology company,” said Lovelock.

Meanwhile, IT spending in 2019 in the US is predicted to grow by 3.5 per cent and IT spending in China is predicted to grow by just 0.1 per cent. Ongoing tariff disputes however are not currently expected to make a significant impact on these figures. 

“Tariffs do not have a direct effect on IT spending, yet,” Lovelock said. 

“Should tariffs extend to devices like PCs and mobile phones, we will likely see manufacturer's switch supply routes to minimise costs and have their technology made outside of China.”  

It is situations like changing trade policies, along with intellectual property rights and multiple privacy laws that is driving a need for security according to Lovelock, with spending expected to increase by 10.5 per cent in 2019 and cloud security spending projected to increase by 41.2 per cent over the next five years. 

By focusing on the cloud, Gartner predicts these businesses will be seen as “digital leaders” in the future.  

“Most companies are caught trying to either cut costs or invest for growth, but the top-performing enterprises are doing both,” Lovelock added.  

“A core challenge facing the industry is how organisations can operate as both a traditional company and a technology company at the same time.”

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