Inside Advanced Scale Challenges|Saturday, July 21, 2018
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Enterprise Software, AI Driving Global IT Spending 

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Spending on enterprise software is projected to jump by a healthy 9.5 percent in the coming year as demand is stimulated by software services platforms, according to a new global IT forecast that also predicts heavy investments in AI over the next three years.

Gartner predicted this week that overall IT spending will continue to expand in 2018, growing by 4.5 percent year-on-year to $3.7 billion. Spending it forecast to slow next year to a modest 2.7-percent clip.

For now, enterprise software sales continue to push overall spending higher. Gartner reckons 2018 spending will reach $389 billion, driven by financial management systems, human resources and analytics applications.

Meanwhile, datacenter spending continues to decline as more companies shift operations to the cloud. Gartner reported Tuesday (Jan. 16) that expenditures for datacenter systems would grow a mere 0.6 percent during 2018 to $179 billion. Datacenter budgets are expected to remain flat or decline slightly next year, the market tracker said.

Beyond next year, Gartner (NYSE: IT) joined a chorus of market analysts predicting heavy investment in AI technology. It forecasts $2.9 trillion in "new business value opportunities" tied to AI investments by 2021, including the recovery of more than 6 billion hours of worker productivity via machine learning and other forms of automation.

"That business value is attributable to using AI to, for example, drive efficiency gains, create insights that personalize the customer experience, entice engagement and commerce, and aid in expanding revenue-generating opportunities as part of new business models driven by the insights from data," said John-David Lovelock, Gartner's research vice president.

"Spending on AI for customer experience and revenue generation will likely benefit from AI being a force multiplier — the cost to implement will be exceeded by the positive network effects and resulting increase in revenue," Lovelock added.

Despite the bullish forecast for enterprise software and adoption of AI in the workplace, more mundane but essential networking and IT services account for about two-thirds of global technology spending. For example, communications services accounts for the lion's share of global IT spending on an annual basis.

The market analyst again leavened its bullish IT spending forecast with lingering concerns about global currency fluctuations and the possibility of a global recession in the coming year.

About the author: George Leopold

George Leopold has written about science and technology for more than 30 years, focusing on electronics and aerospace technology. He previously served as executive editor of Electronic Engineering Times. Leopold is the author of "Calculated Risk: The Supersonic Life and Times of Gus Grissom" (Purdue University Press, 2016).

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