• IT spending on the global scale will reach a whopping USD 4.6 trillion in 2023, a 5.1% increase from 2022.
  • Gartner also revealed the findings of a Board of Directors Survey evaluating their digital thinking and organizational trends.

In times when the global economy is facing turbulent times, conventional wisdom would entail a reduction in costs — not the other way around. However, according to Gartner, a research and consulting company, IT spending on the global scale will reach a whopping USD 4.6 trillion in 2023, a 5.1% increase from 2022.

Gartner further predicts that 69% of CFOs plan to give their digital technology spending a boost, and CIOs are being directed to accelerate time to value digital investments.

The firm says that this goes on to indicate that in the wake of economic turmoil, many organizations continue to give their digital business initiatives a push.

Gartner will debate this and other IT trends with CIOs and other IT leaders later this week at the Gartner IT Symposium/Expo 2022.

John David Lovelock, the distinguished VP analyst at Gartner, said, “Enterprise IT spending is recession-proof as CEOs and CFOs, instead of reducing IT budgets, are increasing spending on digital business initiatives.”

Focus on software, de-emphasize hardware

Lovelock observed that economic upheaval alters the landscape of technological investment, raising spending in certain sectors while accelerating reductions in others. However, this is not anticipated to significantly influence the total corporate IT expenditures.

The latest Gartner research predicts that:

  • Software expenditures will increase by 11.3%
  • IT services expenditures will increase by 7.9%
  • Data center systems will expand by 3.4%
  • Communication services will increase by 2.4%

Nevertheless, device expenditures will decline by 0.6%

According to the company, organizations incur significant expenditures to maintain current on-premises data centers, but the push toward new spending continues. It further states that companies are using digital to reshape revenue streams, add new goods and services, change the cash flow of current products and services, and alter the value proposition of existing products and services. Technology will be used.

“This trend has fuelled a shift from buying technology to building, composing, and assembling technology to meet specific business drivers,” said Lovelock.

According to him, this is the rationale for the growth of cloud versus on-premises for new IT spending. Back-office and operational demands in other departments are being added to the project lists for digital transformation.

The goals of digital transformation are not yet achieved

Gartner also revealed the findings of a survey of the Board of Directors Survey evaluating their digital thinking and trends within their organization.

Interestingly, executives (CEOs) are the primary drivers of digital business activities (28%). This is ahead of CTO (19%) and CIO (14%).

Partha Iyengar, the distinguished VP analyst at Gartner, said, “Historically, boards have looked to IT to lead the digital business.”

But Iyengar stated that in view of the macro and strategic benefits that CEOs anticipate from digital enterprises, CEOs would now be directly responsible for enterprise revenue or growth.

In addition, according to a poll of 281 board directors from North America, Latin America, Europe, and Asia/Pacific, 89% of board directors believe that digital business is now an integral component of all corporate growth initiatives. However, just 35% indicate that their digital transformation objectives have been met or are on pace.

Jorge Lopez, the distinguished VP analyst at Gartner, said, “Boards of directors (BoDs) have reached a point where digital business strategy and overall business strategy are one and the same.”

Lopez stated that while CIOs have made considerable strides in exploiting technology, it is not enough to reap the expected strategic business advantages. The most “future-aware” boards seek possibilities amid disruption and risk.

“CEOs and CIOs will need to adopt this mindset as technology plays an increasing role in driving business success,” Lopez said.

AI/ML to drive digital business success

In the meanwhile, boards want to invest in “breakthrough” technologies that will propel digital business and corporate success:

  • About 40% believe Artificial Intelligence (AI) and Machine Learning (ML) technologies are crucial to the success of digital businesses.
  • Thirty percent believe that software enhancements are essential.
  • Twenty-eight percent believe data and analytics are crucial.
  • Around 22% believe cloud computing is necessary.

In contrast, references are made. Digital twins (two percent) and autonomous technologies (two percent) have the lowest probability of success.

Gartner noted that ultimately, boards want to upgrade and extend “foundational” solutions like enterprise resource planning (ERP) and customer relationship management (CRM) tools.

Risk-taking is also necessary for digital acceleration, and boards are preparing to expand their risk tolerance. As per the survey, 64% of board directors want to do so by 2024, a 7% increase over last year’s results.

Lopez said, “Boards recognize that decision-making in a turbulent business environment requires a high level of risk. This risk-taking ability is critical to keeping up with the pace of innovation. Similarly, many boards of directors are expanding their vision to focus on a “digital economic architecture.”

This is the strategy non-digital organizations employ to gain the economic benefits — growth, profitability, market capitalization, and brand value — that “born digital” business models afford digital companies.

As per the survey, 71% of directors are pursuing or want to pursue this sort of economic structure.

Iyengar acknowledged that this demands a considerable mental adjustment. “Boards must identify and capitalize on new sources of production and value,” he added, which necessitates a greater willingness to tolerate and even embrace risk.