Gartner says Canadian IT spending to grow 1.1% in 2019

Gartner says Canadian IT spending to grow 1.1% in 2019

Canadian IT spending is projected to total $88.7 billion in 2019, an increase of 1.1% y-o-y, according to the latest forecast by Gartner, Inc. This is down from 3.5% growth in 2018.

The outlook for the market was discussed during the Gartner IT Symposium/Xpo 2019, in Toronto. Global IT spending is also forecast to grow 1.1% in 2019, reaching $3.79 trillion.

Spending on cloud system infrastructure services (IaaS) will grow from $39.5 billion in 2019 to $63 billion through 2021. Gartner predicts that throughout 2022, growth in enterprise IT spending for cloud-based offerings will be faster than growth in traditional (non-cloud) IT offerings.

The largest cloud shift has so far occurred in application software and that segment is poised for continued strong growth with increased growth expected for the infrastructure software segment over the same period.

John-David Lovelock, research vice president at Gartner, said: “Uncertain economic and political environments and trade wars are slowing growth in IT spending in Canada in 2019.

“Specifically, steel and aluminum tariffs, uncertainty around car manufacturing, continuing problems in the country’s oil industry and indecision around the pending trade deal to replace the North American Free Trade Agreement (NAFTA) are some of the impacts affecting IT spending. However, we expect some of that uncertainty to be resolved by 2020 and IT spending is expected to pick up.”

Although most Canadian organizations are not as far along in their digital journey as their global counterparts, their use of cloud services is only second to the US.

Lovelock said: “We are seeing an increased investment in off-premises capabilities and decreased investment in on-premises capabilities. This is reflected in the flat growth for data center systems in 2019 and the strong growth for enterprise software in 2019 and 2020.”

Gartner Says Canadian IT Spending to Grow 1.1% in 2019

“The choices CIOs make about technology investments are essential to the success of digital business. Disruptive emerging technologies, such as artificial intelligence (AI), will reshape business models as well as the economics of public and private-sector enterprises. Investment in AI, for example, has experienced a huge jump from 2018, and AI will have a major effect on IT spending,” said Lovelock.

“Gartner’s 2019 CIO Agenda Survey showed that 24% of Canadian CIOs plan to increase investment in AI, up from 2% in 2018. Additionally, Gartner’s AI business value forecast predicts that Canadian organizations will receive $36 billion worth of benefit from the use of AI this year alone.”