IT spending may seem to be falling, but it’s really changing from IT to the business. Gartner says worldwide IT spending will total $3.5 trillion this year, a 0.5 percent drop from 2015. It will not get better over the next few years, with Gartner predicting that worldwide IT spending will increase just 2 to 3 percent from 2017 to 2020. How can that be possible given the ever enlarging significance of technology to modern business? The growth of the cloud is a large reason: Tech costs are getting to be more affordable thanks to the cloud’s lower prices and greater efficiency.
The other major reason is the fact that as firms increasingly embrace the cloud, they do so by using cloud services that best serve the business units. Frequently, that is considered a business unit price, not an IT price. Hence, an increasing part of the IT funding is no longer in IT, and also the increase of IT spending seems smaller than it is. Both tendencies are occurring at the exact same time, which really makes the change from the historical pattern of constant IT increase appear so remarkable. Nonetheless, though IT spending is going down, the business is getting more value from IT (whoever possesses it) using this model. Who are the winners and losers of the move? The losers are sellers that live off focused IT, like the enormous enterprise software and hardware businesses, in addition to consulting firms. The winners are the business units that have dedicated technology resources, particularly those that leverage the more agile and more affordable resources of cloud computing. Central IT may lose as well because their portfolio decreases as some of it moves to business units. Or central IT may win because it still supplies crucial incorporate governing and maybe cloud service brokering — that gives IT more worth to the business, not less. Whether IT wins or loses from this shift depends on where it is worth lies. The dropping IT spend reported by the likes of Gartner and IDC might not be awful news. It is surely great news for cloud computing, in addition to for the business units which have been second class citizens in the recent past.