Forrester downgrades 2014 global IT spending forecast, citing weak first half

But CIOs shouldn't shut their wallets just yet, according to analyst Andrew Bartels

Forrester has cut its worldwide IT spending forecast for this year, saying growth will be 3.3 per cent in US dollars, rather than 6.2 per cent. Total spending will be $US2.2 trillion.

The analyst firm blamed a weak first half for its downgrade, but said growth should pick up in the remainder of the year.

Advanced economies such as the US. and UK, which are part of what Forrester calls the Tech Twelve, "will be the locomotive that pulls the rest of the tech train," vice president and principal analyst Andrew Bartels wrote in a report released Wednesday. Smaller tech markets such as Latin America will have higher relative growth rates than the U.S., but not the same appetite to try out new technologies, he added.

Tech products and services focused on customer processes will see the strongest growth this year, rising 9.6 per cent to $US297 billion, and there are valid reasons for this outcome, according to the report.

"With increased pressures to respond to new customer demands and expectations rippling through the advanced economies, firms will emphasize investments in customer-process technologies, especially CRM [customer-relationship-management] and marketing automation SaaS [software-as-a-service] apps, mobile applications, and analytics and big data for identifying ways to win, serve, and retain customers," Bartels wrote.

That said, nearly 50 per cent of spending on customer-process technologies will occur in the US, he added.

Technology focused on employee processes, which include business applications, PCs, tablets, smartphones and related consulting services, will rise 2.3 per cent globally to $US1 trillion.

Spending on IT infrastructure is now set to tick up 2.5 per cent this year to $US917 billion, according to Forrester.

The report's conclusions should be viewed in the proper context by IT buyers, according to the report.

"CIOs may interpret the lowering of our tech market growth forecast as a signal to slow their own tech spending," Bartels wrote. "That would be a mistake. In most countries, the bulk of the slowdown in growth has already occurred in the first half of 2014."

There should be enough of an uptick in growth now "to be able to invest in new projects and initiatives based on smart and mobile technologies in the second half while taking advantage of vendors' willingness to cut good deals because of their poor first-half performance."

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris' email address is Chris_Kanaracus@idg.com

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Tags IT managementCIO roleservicessoftwareForrester Researchhardware systemsindustry verticalsit strategy

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Chris Kanaracus

IDG News Service
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