News

Except for Cloud, Don't Expect Much IT Spending Growth for 2020

• By Kurt Mackie
• May 11, 2020

Spending on IT infrastructure, specifically cloud infrastructure, promises to be one of the very few bright spots this year for IT, according to recent forecast data from research firm IDC.

For all of 2020, IDC expects IT spending to drop by 5.1 percent to $2.25 trillion. That's just the current baseline projection, however, compiled in April and influenced by the economic slowdown caused by the COVID-19 pandemic. IDC also has a more pessimistic figure that's based on an economic recovery not happening in the second quarter but instead persisting throughout the year.

Under the pessimistic scenario, IT spending decreases range from 7 percent to 10 percent, according to an explanation last week by Stephen Minton, program vice president in IDC's Customer Insights & Analysis group, in an IDC Web presentation (viewable with sign-up).

In March, IDC had predicted there would be a 2.7 percent decrease in IT spending for 2020. IDC estimates had been far more positive earlier, before the worldwide COVID-19 reactions. For instance, in January IDC thought IT spending would be a 5.1 percent increase, and even 4.3 percent per its February forecast.

IDC's April estimate viewed the top IT spending loss-leader category as being device spending, such as spending on PCs and phones. Device spending is predicted to decrease by 12.4 percent in 2020 per IDC. The only exception in this dismal IT spending forecast is infrastructure spending, which is predicted to increase in 2020 by 3.8 percent (see table).

The infrastructure category of IT spending consists of "server/storage/network hardware and cloud services," IDC's announcement explained.

Minton indicated that 2020 will see most of the IT spending growth in the cloud.

"Where there is growth, most of it is in the cloud," said Minton in a released statement. "Overall software spending is now expected to decline as businesses delay new projects and application roll-outs, while there is a fundamental link between employment and spending on things like software licenses and campus networks. On the other hand, the amount of data that companies must store and manage is not going anywhere. Increasingly, even more of that data will be stored, managed, and increasingly also analysed in the cloud."

On the other hand, IDC expects that IT services spending will decline in 2020. Organizations could put off big IT projects, but they also may face contradictions, such as being "reluctant" to delay their digital transformation efforts.

"When all is said and done, we expect to find that early adopters of cloud and other digital technologies were best positioned to ride out this kind of storm with the least amount of disruption from an operational perspective, even if the direct impact on revenue is still more affected by external factors that no CEO or CIO saw coming," Minton explained.