Better Customer Experiences Pushing Global Enterprise IT Spend

Gartner predicts IT spending will rebound this year. The consulting firm estimates global enterprise IT spending will grow to $3.8 trillion in 2014, up 3.1 percent year-over-year — and much of that increase will be driven by a desire to improve customer experiences.

Enterprise Software Spending

The figures, which appear in Gartner Worldwide IT Spending Forecast (fee required), represent a slight decline from earlier predictions of 3.6 percent growth this year. The cut, according to Gartner, is the result of an expected drop in telecom services investment.

However, the outlook for enterprise software vendors remains good, with spending on items including computers expected to growth by 6.8 percent year-over-year.

Devices took a hit in 2013, as spending declined 1.2 percent. But they are expected to regain that ground and add some this year.

Gartner maintains the convergence of desktops, laptops, ultramobiles (including tablets) and mobile phone segments will grow this sector by 4.3 percent in 2014.  Price is expected to become the big differentiator between brands as devices become more aligned in terms of function.

However, — and, unsurprisingly, given the evolution of customer experience over 2013 — enterprises are increasing what they spend on software that may improve the customer experience. As Richard Gordon, Gartner vice president, noted:

Investment is coming from exploiting analytics to make B2C processes more efficient and improve customer marketing efforts. Investment will also be aligned to B2B analytics, particularly in the SCM [Supply Chain Management] space, where annual spending is expected to grow 10.6 percent in 2014." 

The specific focus, he said, will be enhancing the customer experience through the development of agile and effective pre-sale, sale and post-sale processes.

Last month, Gartner’s Tom Eid predicted enterprise software spending would recover this year, largely because of the combined forces of cloud computing, data management, mobile applications and social business. The nexus of these four forces will result in the biggest disruption to the software market since 2000, but will also result in new opportunities for vendors, the research concluded.

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IT Software Losers

Both data center and telecom investment will suffer.  Forecasts for data center spending have been cut from 2.9 percent to 2.6 percent because growth in controller-based storage and enterprise communications applications is expected to be lower than previously thought.

Telecom spending will be cut too, reflecting a decline in the use of voice-based devices and the rapid growth in the use of domestic WiFi:

A number of factors are involved, including the faster-than-expected growth of wireless-only households, declining voice rates in China and a more frugal usage pattern among European customers. The latter coincides in Western Europe with a breakout of fierce price competition among communications service providers to retain customers and attract new ones."

Gartner also downgraded IT services growth rates, which should come as a warning shot for companies like IBM that are betting on large services revenues. The revision has largely been pushed by an expected reduction in outsourcing, specifically in collocation, hosting and data center growth rates. Gordon noted:

We are seeing CIOs increasingly reconsidering data center build-out and instead planning faster-than-expected moves to cloud computing. Despite these small reductions, we continue to anticipate consistent four to five percent annual growth through 2017." 

The findings are the result of an analysis of sales by thousands of vendors across the entire IT space and, as such, are depending on existing economic conditions.