Global enterprise spending on IT services was constrained by ‘change fatigue’ among CIOs, according to Gartner’s latest report on worldwide IT spending. While $4.67trn worth of IT services were sold in 2023, that constituted a rise of just 0.3% compared with the previous year, a figure dragged down by lacklustre device sales. The research organisation was more optimistic for 2024, predicting a total of $5trn in sales for the global IT services market – driven largely by increased investment from enterprises.
These businesses, explained Gartner distinguished VP analyst John-David Lovelock, “continue to find more uses for technology. IT has moved out of the back office, through the front office, and is now revenue-producing. Until there is a plateau for how and where technology can be used in an enterprise, there cannot be a plateau in enterprise IT spending.”
CIO change fatigue an anchor on increased enterprise IT spend
Even so, the report argues that IT spending growth could have been higher were it not for a phenomenon it calls ‘CIO change fatigue’: a reluctance to sign new contracts, partner with new technology partners or commit to long-term investment for lack of certainty about the outcome. This was a pattern with origins in the pandemic, Lovelock told Tech Monitor, emanating from the shift from remote to hybrid work. As such, CIOs became a “little hesitant to start new projects when they knew the goalposts were going to change,” he says.
It also made them more likely to ask questions about the concrete value a given project would deliver, in addition to its inherent risks. The net effect? “It just dragged contracts out,” says Lovelock. “Contracts that should have taken two, three months to decide could take four.” This, in turn, has led to a greater disconnect between budget and spend at major organisations, with CIOs allocating the latter towards the end of last year only to schedule spending for early 2024."
This attitude will eventually relax over the next few months, argues Lovelock. “The number of changes buffeting margins, efficiencies and revenue is not likely to be as drastic this year,” he says. Consequently, "CFO and CEO priorities are a little more locked in for the next 18 months.”
Generative AI is not the spur for IT sales many predicted
Gartner’s positive predictions for IT sales are likely to please businesses like Verizon, which yesterday announced that the value of its business services division had declined by $5.8bn, and Atos, which released a disappointing cash flow forecast earlier this week. The market research organisation’s statements about the contribution of generative AI towards global IT sales also tally with its broader predictions for the field. In September 2023, Gartner analyst Arun Chandrasekaran told Tech Monitor that the generative AI market was already oversaturated with startups offering very similar products and services.
At the time, Chandrasekaran affirmed the hesitancy many CIOs were feeling about implementing generative AI in their businesses. “You have to be realistic in terms of the business value gains that you should expect,” he said. “You should be a lot more methodical in terms of how you choose the use cases that are technically feasible.”
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