Aussie IT spend to grow 13 percent to $117 billion in 2022

IT spending in Australia is expected to reach $117.2 billion in 2022, a 13 percent year over year increase, according to research from Gartner.

The company however said a large portion of that growth was attributed to exchange rate changes against the US dollar, and that actual year over year growth in 2022 would be 6.9 percent.

Most of the spending will go to IT services, which is predicted to reach $41.5 billion, up 12.2 percent from $37 billion in 2021. Software will see the most growth at $29.2 billion, up 21.4 percent from $24 billion last year.

Worldwide IT spending will see a comparatively more modest growth rate of 4 percent to US$4.4 trillion, with Gartner citing more IT investments amid uncertainty around current events.

“This year is proving to be one of the noisiest years on record for CIOs,” Gartner research vice president John-David Lovelock said.

“Geopolitical disruption, inflation, currency fluctuations and supply chain challenges are among the many factors vying for their time and attention, yet contrary to what we saw at the start of 2020, CIOs are accelerating IT investments as they recognise the importance of flexibility and agility in responding to disruption.

“As a result, purchasing and investing preference will be focused in areas including analytics, cloud computing, seamless customer experiences and security.”

Gartner added that inflation impacts on IT hardware from the past two years are dissipating and are instead spilling over into software and services.

The company said spending growth in those segments are boosted by service providers increasing their prices due to the current dearth of IT talent, which has prompted more competitive salaries. Gartner said this is expected to run through 2023.

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

Gartner said spending growth in enterprise application software, infrastructure software and managed services is demonstrating that the digital transformation trend is systemic and long-term, rather than a one- or two-year short term trend.

The company also expects digital business initiatives like experiential end-consumer experience and optimisation of supply chain would 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, but price and wage inflation combined with talent shortages and supply chain issues would more likely affect CIOs technology plans.

“CIOs anticipate having the financial and organisational ability to invest in key technologies throughout this year and next,” Lovelock said.

“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.

“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, as well as negotiate with their vendor partners to assume ongoing risks, 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 and beyond.”