NZ businesses investing in IT at twice the global rate: Gartner

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NZ businesses investing in IT at twice the global rate: Gartner

An extra $1.4 billion is expected to be spent on IT in Aotearoa New Zealand this year with every area experiencing continued growth, even among economic pressures, according to new research from Gartner.

The analyst company's forecast claims that total spending will grow up to just shy of $16 billion total, an increase of 9.7 percent over 2021’s $14.6 billion, which represented 9.65 percent growth over 2020.

This is more than double the global IT spending growth rate of 4 percent, which will see worldwide spending hit US$4.4 trillion.

Back in NZ, IT services spending will account for the greatest portion of IT spending growing to 4.6 billion, a 10 percent year over year increase, three percentage points higher than the previous year’s growth rate.

Device spending will continue to grow at a reasonable 14.9 percent to $2.9 billion, a drastic though not unexpected tumble from the 26.3 percent growth rate it saw from 2020 to 2021 when the move to working from home gave the market a sharp boost.

The fastest growth will be in Software climbing up to $3.65 billion, a 15.1 percent increase, slightly lower than 2021’s 16 percent.

Data centre systems will see the biggest growth rate jump, from 1.2 percent in 2021 to 8.6 percent in 2022, reaching $629 million. 

There have been several high-profile announcements about the building of new data centres in Aotearoa this year.

Finally, communications services will see a modest 2.4 percent jump to 4.2 billion, maintaining its spot as the second-largest segment in the analysis.

Looking at the global stage, Gartner said that inflation has finally begun to leech over from hardware to software, hitting global spending rates.

This, along with the senior talent shortage raising salaries, is causing IT providers to increase their prices, however, Gartner said that the invasion of Ukraine by Russia will not notably impact IT prices. 

“Geopolitical disruption, inflation, currency fluctuations and supply chain challenges are among the many factors vying for their time and attention, yet contrary to what we saw at the start of 2020, CIOs are accelerating IT investments as they recognise the importance of flexibility and agility in responding to disruption,” said Gartner distinguished research vice president John-David Lovelock.

“As a result, purchasing and investing preference will be focused in areas including analytics, cloud computing, seamless customer experiences and security.”

Gartner said that projects like experiential end-consumer experience and optimisation of supply chains will see global spending on enterprise applications and infrastructure software reach double-digit growth in 2023.

“CIOs who keep their eye focused on key market signals, such as the shift from analogue to digital business and buying IT to building it, as well as negotiate with their vendor partners to assume ongoing risks, will fare better in the long-term. At this point, only the most fragile companies will be forced to pivot to a cost-cutting approach in 2022 and beyond,” said Lovelock.

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