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Digital Transformation Growth Defies Market Volatility

The forward-looking CEO’s commitment to ongoing investment in Information Technology (IT) is persistent. Worldwide IT spending is forecast to total $4.4 trillion in 2022 — that’s an increase of 4 percent from 2021, according to the latest worldwide market study by Gartner, Inc.

“This year is proving to be one of the noisiest years on record for CIOs,” said John-David Lovelock, vice president at Gartner. Regardless, digital transformation remains a high priority across the globe.

Geopolitical disruption, inflation, currency fluctuations, and supply chain challenges are among the many market volatility factors vying for attention, yet contrary to what Gartner saw at the start of 2020, enterprise CIOs are accelerating IT investments in 2022.

Digital Transformation Market Development

As a result, purchasing and investing preferences will be focused on areas including data analytics, cloud computing, seamless customer experiences, and IT security. Inflation impacts on IT hardware from the past two years are finally dissipating and are starting to spill over into software and services.

With the current dearth of skilled IT staff talent prompting more competitive salaries, technology service providers are increasing their prices, which is helping to increase spending growth in these segments through 2022 and 2023.

Software spending is expected to grow 9.8 percent to $674.9 billion in 2022 and IT services are forecast to grow 6.8 percent to reach $1.3 trillion.

The rise of enterprise application software, infrastructure software, and managed services in the near and long term demonstrates that the trend toward digital transformation is not a one- or two-year trend, rather it is systemic and long-term.

For example, infrastructure as a service (IaaS) underpins every major consumer-focused online offering and mobile application, accounting for a significant portion of the almost 10 percent growth in software spending in 2022.

Gartner expects digital business initiatives such as experiential end-consumer experience and optimization of the supply chain to push spending on enterprise applications and infrastructure software into double-digit growth in 2023.

The Russian invasion of Ukraine is not expected to have a direct impact on global IT spending. Price and wage inflation compounded with talent shortages and other delivery uncertainties are expected to be greater impingements on CIOs’ plans in 2022 but will still not slow down technology investments.

“CIOs anticipate having the financial and organizational ability to invest in key technologies throughout this year and next,” said Lovelock. “Some IT spending was on hold in early 2022 due to the Omicron variant and subsequent waves but is expected to clear in the near-term.”

Outlook for Digital Transformation Spending Growth

According to the Gartner assessment, CIOs who keep their eye focused on key market signals — such as the shift from analog to digital business, and buying IT to building it — will fare better in the long term.

At this point, only the most fragile companies will be forced to pivot to a cost-cutting approach in 2022. For most, business technology investment will continue to fuel profitability and digital business growth.

That said, I anticipate that forward-thinking CEOs will continue to carefully choose where they align IT budgets to new projects. The shift to flexible working models, and the challenges that CHROs now encounter with employee recruitment and retention, will advance the strategic use of modern Digital Workspace solutions.

Originally published at https://blog.geoactivegroup.com on April 18, 2022.

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David H. Deans

David H. Deans

Technology, Media, Telecom analyst, consultant, columnist