Gartner: Asia Pacific IT Spending to Make V-Shaped Rebound With Five Percent Growth in 2010

Analysts provide IT industry outlook at Gartner Symposium/ITxpo in Sydney this week

The IT industry is exiting its worst year ever, as worldwide IT spending is on pace to decline 5.2 percent, according to Gartner, Inc. However, the IT industry will return to growth in 2010, with IT spending forecast to total US$3.3 trillion, a 3.3 percent increase from 2009.

In Asia Pacific, IT spending is expected to grow by 5 percent to reach US$515.6 billion in 2010.

Speaking at Gartner Symposium/ITxpo in Sydney this morning, Peter Sondergaard, senior vice president at Gartner and global head of Research, said that this represented a fast V-shaped recovery for IT spending in the region.

“Emerging regions will resume strong growth,” said Mr. Sondergaard. “By 2012, the accelerated IT spending and culturally different approach to IT in Asia will directly influence product features, service structures and the overall IT industry. Silicon Valley will not be in the driver’s seat anymore.”

However, growth varies considerably by country, vertical market and IT sector. Mr. Sondergaard said that while software would post the strongest growth in Asia Pacific, telecommunications still represented the largest area of IT investment.

Asia Pacific End-User Spending on IT by Technology Segment (US$ millions)
Segment 2009 2010 Growth %
Computing Hardware 68,507 71,717 4.7%
Software 20,091 22,148 10.2%
IT Services 52,101 56,935 9.3%
Telecom 350,239 364,841 4.2%
Asia/Pacific Total 490,938 515,642 5.06%

In Australia, the five-year outlook for enterprise IT spending is a compound annual growth rate of 1.3 percent, with total IT spending by Australian business to reach A$56.4 billion by 2013. The vertical sectors with the highest IT spending growth would be communications (3.2 percent), healthcare (2.6 percent) and utilities (2.3 percent)

While IT spending will increase next year, Gartner cautioned IT leaders not to be overly optimistic.

“While the IT industry will return to growth in 2010, the market will not recover to 2008 revenue levels before 2012,” said Mr. Sondergaard. “2010 is about balancing the focus on cost, risk, and growth. For more than 50 percent of CIOs the IT budget will be 0 percent or less in growth terms. It will only slowly improve in 2011.”

Mr. Sondergaard said that the three most-searched terms by Gartner clients on gartner.com provide some clues as to the priorities of IT leaders around the world. Cost remained the most-search term during 2009, although it peaked in May, followed by cloud computing.

“Next year will be the year when cloud computing moves from the discovery phase to small pilots, as part of organisations’ desire to move from owned to shared IT,” he said.

The third most-searched terms on gartner.com were business applications such as ERP and CRM. “We believe that 2010 will see increased focus on optimisation of business processes linked to software applications, what we call application overhaul. That is what will drive growth in the software segment,” Mr Sondergaard said.

Mr. Sondergaard said three additional topics that were important in 2009 will continue to dominate IT leaders’ agendas in 2010. These three topics include:
• Business Intelligence — Users will continue to expand their investments in this area with the focus moving from “in here” to “out there”

• Virtualization — IT leaders should not just invest in the server and data center environment, but in the entire infrastructure. In 2010, users will create the cornerstone for the cloud infrastructure. They will enable the infrastructure to move from owned to shared.

• Social Media — Organisations are starting to scale their efforts in this space. The technologies are improving and organizations realise this is not only about digital natives. It’s about all client segments including the most significant: the population in the next 10 years, the above 60 year old generations.

While those topics are important to IT agendas today, Mr. Sondergaard highlighted three themes that will become important over the next few years. They include:

• Context-Aware Computing — organisations will use information about customers to improve the quality of the interaction. Emerging context-enriched services will use location, presence, social attributes and other environmental information to anticipate immediate needs, offering more sophisticated, situation-aware and usable functions.

• Operational Technology (OT) — OT is devices, sensors, and software used to control or monitor physical assets and processes, such as manufacturing systems and . The rapid growth of OT is increasing the need for a unified view of information covering business process and control systems. OT will become a mainstream focus for all organisations.

• Pattern-Based Strategy — Organisations will need to proactively seek, model and adapt to leading indicators, often termed “weak” signals, that form patterns in the marketplace, and to exploit them for competitive advantage. A Pattern-Based Strategy will allow an organisation to not only better understand what’s happening now in terms of demand, but also to detect leading indicators of change, and to identify and quantify risks emerging from new patterns rather than continuing to focus on lagging indicators of performance.

About Gartner Symposium/ITxpo
Gartner Symposium/ITxpo is the industry’s largest and most important annual gathering of CIOs and senior IT executives. For more information, see www.gartner.com/au/symposium.

About Gartner
Gartner, Inc. (NYSE: IT) is the world’s leading information technology research and advisory company. Gartner delivers the technology-related insight necessary for its clients to make the right decisions, every day. From CIOs and senior IT leaders in corporations and government agencies, to business leaders in high-tech and telecom enterprises and professional services firms, to technology investors, Gartner is the indispensable partner to 60,000 clients in 10,000 distinct organisations. Through the resources of Gartner Research, Gartner Executive Programs, Gartner Consulting and Gartner Events, Gartner works with every client to research, analyse and interpret the business of IT within the context of their individual role. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, U.S.A., and has 4,000 associates, including 1,200 research analysts and consultants in 80 countries. For more information, visit www.gartner.com.

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