For those who doubted the digital transformation trend, it’s become clear that it’s not a marketing fad or a buzzword but is now standard operating protocol for businesses. A forecast released this week from market research firm Gartner confirms this, as the projected increase in application software, infrastructure software and managed services spending highlights that digital transformation is a CIO marathon and not a sprint.
According to Gartner, every major consumer-focused online offering and mobile application is underpinned by infrastructure-as-a-service and comprises a substantial portion of the near 10% growth in software spending that will occur this year.
Gartner said it expects digital business initiatives, such as experiential customer experience and optimization of supply chains, to push spending on enterprise applications and infrastructure software into double-digit growth next year.
Gartner’s prediction is that worldwide IT spending is projected to total $4.4 trillion in 2022, an increase of 4% from 2021.
But the technology battleground isn’t just about hardware and software, it’s also about talent. The tight IT talent pool is driving up salaries and forcing technology service providers to increase their prices. This is pushing up spending growth in analytics, cloud computing, seamless customer experiences and security
Gartner expects software spending to grow 9.8% to $674.9 billion in 2022; IT services are forecast to grow 6.8% to reach $1.3 trillion.
Cloud’s gain is traditional IT’s loss, according to a Gartner market forecast released earlier this year. Enterprise spending on public cloud computing in addressable segments will be greater than spending on traditional IT by 2025. Gartner’s ‘cloud shift’ research includes only those enterprise IT categories that can transition to cloud, within the application software, infrastructure software, business process services and system infrastructure markets. “By 2025, 51% of IT spending in these four categories will have shifted from traditional solutions to the public cloud, compared to 41% in 2022. Almost two-thirds (65.9%) of spending on application software will be directed toward cloud technologies in 2025, up from 57.7% in 2022,” Gartner predicted.
In 2022, traditional offerings will constitute 58.7% of the addressable revenue, but growth in traditional markets will be much lower than in the cloud. Demand for integration capabilities, agile work processes and composable architecture will drive a continued shift to the cloud, as long-term digital transformation and modernization initiatives are brought forward to 2022. Technology product managers should use the cloud shift as a measure of market opportunity.