Worldwide IT spending forecast to decline 0.5% in 2016: Gartner

Worldwide IT spending is forecast to total US$3.49 trillion in 2016, a decline of just 0.5% over 2015 spending of US$3.5 trillion, according to information technology research and advisory firm Gartner, Inc.

The prediction is down from last quarter’s forecast of 0.6% growth and is mainly due to currency fluctuations, Gartner said in a press release on Thursday.

“There is an undercurrent of economic uncertainty that is driving organizations to tighten their belts and IT spending is one of the casualties,” said John-David Lovelock, research vice president at Gartner, in the release. “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.”

For example, Lovelock said, savings from legacy system optimization and enhancements are being redirected to fund digital initiatives. “Typically, less than 10% of organizations are in cost optimization or cost-cutting mode. However, the need to spend on digital business initiatives in a time when revenue growth does not support runaway IT budgets is forcing more organizations to optimize as a first step. Business processes, as well as IT, are undergoing optimization – digital business requires both. However, many CIOs are reluctant to raise this possibility, given the cultural and political barriers to optimizing business costs.”

Gartner added that the device market (PCs, ultramobiles, mobile phones, tablets and printers) is forecast to decline 3.7% in 2016. The smartphone market is approaching global saturation, slowing growth; the PC and ultramobile markets are expected to decline.

Data center systems’ spending is projected to reach US$175 billion in 2016, a 2.1% increase from 2015, Gartner said in the release. Spending in the IT services market is expected to return to growth in 2016, totalling US$929 billion, up 2.1% from 2015.