With an expected rise of 4.3%, worldwide IT spending is projected to reach a staggering $4.7 trillion in 2023. Such an increase is primarily driven by a noteworthy 14.5% leap in software spending, based on recent data from Gartner.
Surprisingly, amid the current trending dialogues surrounding generative AI‘s transformative power over the workspace and society, Gartner proposes this sector is not dramatically impacting IT spending at present. Instead, they anticipate its future integration into existing frameworks rather than fostering an entirely new, disruptive category.
John-David Lovelock, Distinguished VP Analyst at Gartner, voiced his opinion on this matter. “Generative AI’s best channel to market is through the software, hardware and services that organisations are already using,” he shared. Further emphasizing his stance, Lovelock said, “Most businesses will incorporate generative AI in a slow and controlled manner through upgrades to tools that are already built into IT budgets.”
He views emerging technology as an added feature or upgrade to existing products, resonating with a strategy that limits drastic changes and encourages steady adoption of AI. Despite not requiring AI deployment, Lovelock stresses the necessity for companies to craft a narrative displaying forward-thinking strategy in relation to AI.
The hike in software spending relates partly to firms diverting investment towards fundamental applications and platforms that boost efficiency. For instance, enterprise resource planning (ERP) and customer relationship management (CRM) applications are in higher demand due to their ability to optimize operations.
IT leaders are increasingly procuring technology that automates tasks and enhances efficiency in scenarios where top-quality IT talent is scarce. The primary aim here is to sustain growth with a lesser reliance on human employees.
On the other hand, due to inflation’s effects on consumer buying power, Gartner predicts a drop of 8.6% in devices spending for 2023. Explaining this, Lovelock said, “The devices segment is experiencing one of its worst growth years on record.” He further noted that even if inflation shows signs of slowing in some regions, macroeconomic factors continue to deflate discretionary spending and extending device lifespan.
Rather than generating a fresh budget segment for finance managers in IT sectors to allocate resources for new technology, generative AI seems destined to be subsumed into familiar categories.
It’s worth noting that while there are concerns about AI and automation making certain jobs redundant, the Gartner report illustrates that investments in these areas primarily aim to bridge the gap where human talent is unavailable.
Efforts to adopt generative AI seem to be a slow process, and for now, the technology is unlikely to reshape established IT budgeting. Instead, initial inclusion efforts could be seen as an extra tool that enhances the capabilities of existing IT systems and budgets, rather than an outright disruption.
