Analyses show a slow but steady increase in IT spending in 2024. However, how the money is being spent is the subject of debate.
Following on our last blog, which noted research firm Forrester predicted a 5.5% increase in IT spending in 2024, data from Gartner and Enterprise Technology Research (ETR) also show single-digit increases. Gartner is the most bullish of the three, predicting a 6.8% increase, while ETR’s is more tempered, at 4.3%.
Software and IT services will dominate spending this year, with Gartner forecasting 12.7% and 8.7% growth, respectively. But “change fatigue,” or the hesitation to “sign new contracts, commit to long-term initiatives or take on new technology partners,” according to the firm. “For the new initiatives that do get launched, CIOs require higher levels of risk mitigation and greater certainty of outcomes.”
Moreover, Gartner believes the hype surrounding generative AI is not expected to change the growth of IT spending. Instead, 2024 looks to be a year of organizations laying the groundwork for their genAI plans. Most tech spending will be driven more by “traditional forces,” the company noted.
ETR’s 4.3% increase forecast is more conservative. The firm predicts a healthier rate of spending in the second half of the year, with much depending on companies’ performance. That said, IT spending for 2023 was higher than expected, which could signal growing strength in the market.
AI Shifting Budgets
But while Gartner doesn’t believe genAI will impact IT spending, ETR believes the technology will cause a massive shift in IT budgets. In a recent poll of 415 professionals, 40% of respondents said their organizations are funding AI by reallocating from other budgets.
“The bottom line is 2023 was the year of AI experimentation, and in order to see more sustained and accelerated growth, 2024 has to be the year of AI ROI,” according to the firm.
Granted, the outlook for IT spending isn’t record-setting by any means. But, as I mentioned in my previous blog post, a gradual increase in tech spending is better than no increase. Here’s hoping 2024 spending surprises everyone, including ourselves.
