Published on January 17, 2024, 5:38 pm
Gartner, a leading research and advisory firm, has revised its global tech spending forecast for 2024 due to the proliferation of AI tools. Executives are trimming budgets and exhibiting lower levels of risk tolerance, demanding greater certainty in technology projects. However, despite this cautious approach, enterprise modernization continues to move forward.
Last year, many enterprises allocated a significant amount of their budgets towards “change-the-bank” initiatives. For example, Citigroup invested over $12.2 billion in technology with more than half directed towards these transformational projects. As organizations prioritize efficiency gains and optimization, investments in IT services are expected to drive overall spending growth. Gartner predicts that by the end of the year, IT services will represent the largest segment of IT spend.
The software category experienced a decline in spending growth last year but is expected to recover with an increase of 4.6%. However, Gartner does not anticipate generative AI having a major impact on IT spending in the near future. According to John-David Lovelock, a distinguished VP analyst at Gartner: “IT spending will be driven by more traditional forces, such as profitability and labor.”
Although businesses may face market volatility and uncertainty this year, CIOs have a busy agenda as they strategize how best to leverage technology within their organizations. They must make informed decisions about what technologies to adopt and how to prioritize them in order to meet business objectives.
In related news, CompTIA reports that while the unemployment rate remains low and laid off workers are being absorbed back into the market successfully, there has been a drop in tech occupations.
Overall, it is clear that enterprises are adjusting their approach when it comes to technology investments. While caution is prevalent due to economic uncertainties and demands for greater certainty in projects, organizations continue their journey towards digital transformation.