Despite lingering concerns about the state of the global economy, a recent forecast from Gartner, a renowned analyst house, paints a positive picture for the IT industry in 2024. According to the “Market Databook, 3Q23 Update” by Gartner, global IT spending is projected to reach an impressive $5.1 trillion in 2024, representing an 8 percent increase from the previous year. This promising outlook follows a 4.3 percent rise in IT spending witnessed in 2023, as the world continued its recovery from the COVID-19 pandemic.
Generative AI’s unexpected lag
One of the most intriguing aspects of Gartner’s forecast is the conspicuous absence of generative AI (GenAI) from the spotlight. Despite capturing numerous headlines in recent years, GenAI has yet to make a significant impact on IT spending. Instead, Gartner’s research indicates that investment in AI, in a broader sense, is the driving force behind the overall growth in IT spending.
John-David Lovelock, Distinguished VP Analyst at Gartner, explained, “In 2023 and 2024, very little IT spending will be tied to GenAI. However, organizations are continuing to invest in AI and automation to increase operational efficiency and bridge IT talent gaps. The hype around GenAI is supporting this trend, as CIOs recognize that today’s AI projects will be instrumental in developing an AI strategy and story before GenAI becomes part of their IT budgets starting in 2025.”
Breaking down the spending
Gartner’s forecast highlights the key areas expected to experience the most substantial growth in IT spending in 2024, with software and IT services at the forefront. Both segments are anticipated to see double-digit growth, largely driven by investments in cloud technology.
Software: After a 12.9 percent increase in 2023, software spending is expected to rise by 13.8 percent in 2024. The growth in this category is attributed to the adoption of cloud-based software solutions and increased cybersecurity spending.
IT services: IT services spending is forecasted to increase by 10.4 percent in 2024, following a 7.3 percent rise in 2023. This growth is driven by the demand for IT support and consultancy services, as organizations seek to enhance their operational efficiency.
Public cloud services: Global spending on public cloud services is set to soar by 20.4 percent in 2024. This growth is fueled by a combination of cloud vendor price increases and higher utilization, mirroring the trends seen in 2023.
Data center systems: Spending on data center systems is expected to surge from a 4.7 percent increase in 2023 to a robust 9.5 percent in 2024, indicating a continued investment in infrastructure.
Devices: While devices spending saw a 10 percent decline in 2023, it is predicted to rebound modestly in 2024 with a 4.8 percent growth rate.
Communication services: Spending on communication services is also poised for growth, with a projected 3.3 percent increase in 2024 following a 1.8 percent rise in 2023.
Cybersecurity as a catalyst
Cybersecurity spending emerges as a significant driver of growth within the software segment. In Gartner’s 2024 CIO and Technology Executive Survey, 80 percent of CIOs expressed plans to increase their investment in cyber/information security, ranking it as the top technology category for increased expenditure. The proliferation of AI has introduced new security concerns for organizations, making robust cybersecurity measures imperative.
Lovelock emphasized this point, stating, “AI has created a new security scare for organizations. Gartner is projecting double-digit growth across all segments of enterprise security spending for 2024.”
Change fatigue delays IT spending
Gartner’s research also uncovers an interesting phenomenon known as ‘change fatigue’ among CIOs, which is causing a delay in new IT spending. This fatigue manifests as a reluctance to invest in new projects and initiatives, leading to a portion of IT spending initially planned for 2023 being pushed into 2024. This trend is expected to persist into 2025.
Lovelock elaborated on this trend, noting, “Faced with a new wave of pragmatism, capital restrictions, or margin concerns, CIOs are delaying some IT spending. Organizations are shifting the emphasis of IT projects towards cost control, efficiencies, and automation while curtailing IT initiatives that will take longer to deliver returns.”
Despite ongoing economic uncertainties, Gartner’s forecast paints a promising picture for the IT industry in 2024. With an anticipated 8 percent increase in global IT spending, organizations are demonstrating their commitment to investing in technology to drive growth and efficiency. While generative AI may not be taking center stage just yet, broader investments in AI, cloud technology, and cybersecurity are propelling the IT sector forward. As organizations navigate ‘change fatigue’ and shifting priorities, the IT landscape continues to evolve, promising a dynamic and innovative year ahead.