Artificial intelligence

Software drives strong growth in IT spending, says Gartner • The Register

In the face of continued economic uncertainty and geopolitical strife, computer software spending continues at a blistering pace, with projected growth of 13.5% in 2023.

That’s according to the latest figures from Gartner, which said growth will continue into next year: After hitting $912 billion worldwide in 2023, software spending is expected to rise another 14% in 2024 to reach 1 trillion dollars.

This amid rising global IT spending, which is expected to total $4.7 trillion in 2023, a 4.3% increase from 2022. The current year estimate is up slightly compared to the figure of 4.5 trillion dollars. projected by Gartner in January.

Talk to The registerJohn-David Lovelock, a prominent vice president analyst at Gartner, said IT spending — aside from devices — was more or less recession-proof.

IT consulting grew by 20% globally in 2022, “which we didn’t see coming,” he said.

Meanwhile, software is driving growth in the industry, Lovelock said. Cloud-based software is on track to grow 20% annually, but even on-premises software was growing at a respectable 4-6% rate.

However, the much-hyped investment in AI was absent from user spending. “Artificial intelligence, of course, plays a big role,” Lovelock said. “But when it comes to the application realm, AI is in a sense the most interesting thing happening, and alternatively, the least important thing in terms of IT spend.”

Although it remained at the center of the hype cycle, vendors were spending the most to develop AI and the tools needed around it, rather than end-user organizations. Like the sugar on breakfast cereals, AI is sprinkled on a bit of everything by vendors, he said.

“Every IT vendor needs to have a story around AI this year, but they don’t necessarily need to have a product. They need to at least have a story about where it’s going to go, when it’s going to come out, what it’s gonna do and how awesome it’s gonna be. The trick with AI spraying is that it may not actually result in a price change. We’ll start to see end users choose vendors that have better AI rather than vendors who have less AI or no AI. It won’t change how much they spend.”

Microsoft yesterday announced a $30 per month AI subscription for Microsoft 365 for enterprise users. Adding a Copilot subscription can increase monthly prices by up to 83%.

For his part, Lovelock likened adding AI functionality to apps to introducing spell checkers to early word processors. At first, it was a paid add-on, but soon they would become a built-in feature of all products that users hardly thought about.

Gartner figures show a breakdown of trends in IT spending. While device spending is expected to contract 8.6% this year, to around $700 billion globally, the category will see a return to growth with a 6.9% expansion next year. . Similarly, Gartner expects spending on data center systems to contract this year (-1.5%), but will rise 8.1% next year to $235.5 billion. ®

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