IT Expenditures To Shrink In 2013

Gartner Worldwide’s IT Spending Forecast for 2013 reveals the shift to cloud computing and the conservative approach to IT investment at this time. While IT spending increased by 2.5 percent in 2012, Gartner projects a pullback of about 2.0 percent in 2013. Shifting currency exchange rates are also a factor entering into this projection.

The forecast includes global data from the following IT sectors:

  • dropbox-cloud-computingComputing hardware
  • IT services
  • Data center systems
  • Enterprise software
  • Telecom services markets

  • The IT operations (IT opps) marketplace is changing rapidly and the transition is expected to gain more momentum each year. These changes will change the way data is handled and stored and the nature of IT operations at businesses.

    The Pressure Is On

    David Cearley, Vice President and Gartner Fellow, issued the following statement about cloud technology; “A major technology trend that has permeated the market over the last two years. It sets the stage for a new approach to IT that enables individuals and businesses to choose how they’ll acquire or deliver IT services, with reduced emphasis on the constraints of traditional software and hardware licensing models. Cloud computing has a significant potential impact on every aspect of IT and how users access applications, information and business services.”

    In today’s competitive environment, many businesses see the cloud as a means to reduce IT costs and expand the range of applications that can benefit their operations and customers. Cloud technology allows organisations to reduce the many risks related to on-site IT infrastructure that can shut an operation down for extended periods. These issues can occur with hardware or software.

    Businesses are under pressure to be price competitive. One way to gain an edge is to upgrade and expand IT services while reducing costs, a very reasonable benefit of cloud computing. Businesses face constant pressure to deploy data faster and at higher volumes, other reasonable outcomes of cloud computing. The competitive environment has caused businesses to circumvent internal IT operations.

    Bob Darrow of GigaOm quoted a section of the Gartner report: “IT staffs used to hold the keys to the kingdom — controlling what applications and data ran where and on what devices. That’s all changed — a lot — with the consumerisation of IT and the advent of compute power that in-house developers can spin up on Amazon Web Services and pay for out of petty cash — without IT approval.” As Darrow notes, the economies of scale are reducing  overall IT expenditures in 2013. This does not mean that businesses are sitting on current technology. It does mean that businesses are updating their technology without substantial investment by using cloud technologies.

    A Changing of The Guard

    The biggest reasons for businesses to have internal IT Operations are to ensure stability and reliability of the datacenter. Businesses rely on a consistent and accurate flow of data for all aspects of their operations. The cloud has revamped IT.

    Many medium and large businesses are now viewing IT Operations very differently. The issues now are how to continue to reduce reliance upon internal operations while not losing a technological edge to the competition. A shift to cloud computing marks a shift to innovation at reduced costs. This supports Gartner’s lowered projections for 2013 spending and also points to even lower annual expenditures in the future. Susan Cramm of Gartner explains;

    “The trick is getting from here to there, to move from a world where IT is delivered to the business to one where IT is delivered through the business.”

    The shift from internal IT Ops to external provision of IT services marks a significant shift, not only in focus but, in direction of the industry. The future of cloud computing will rely upon the speed IT services can be delivered. The constant demand for speed will create new jobs but they will not be in-house services. The new age of IT jobs will serve in furthering the cloud or IT services provided by external providers.

    Image representing enStratus as depicted in Cr...

    Image via CrunchBase

    The reason IT expenditures will continue to decrease is that the industry is under pressure to provide more for less. This is a point not missed by James Urquhart, Vice President of product strategy at enStratus.

    “If you are focusing on running applications in an environment you may or may not control, you focus on how to keep code running, data available, configuration viable and policy enforced. And, since the only thing you control is the code, data, configuration and policy, you have to start focusing on how to build performance and survivability into the application itself.”

    All this takes place in an environment where every IT expenditure represents potential savings for those companies that have in-house IT staffs.

    Indeed, the next wave of cloud computing operations will concentrate on diversification of the cloud platform. By not having all business in one basket, so to speak, businesses are expected to continue the steady progression to cloud computing and thus further reduce IT expenditures.

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