Enterprise Innovation
2017 will be year when CIOs return to being builders
By: Fintech Innovation Editors
Gartner predicts 2017 to be a rebound year for IT spending. In a podcast titled “Gartner Thinkcast” he noted that the growth forecast is tempered by global uncertainty in the political front (Brexit and the Donald Trump electoral win polarized the global market).
Gartner pegs worldwide IT spending for 2017 at US$3.5 trillion in 2017, up 2.7% increase from 2016, and slightly lower than an earlier forecast of 3%.
John-David Lovelock. research VP, Gartner John-David Lovelock (photo right). research VP, Gartner picked on the convergence of cloud, Blockchain, digital business and artificial intelligence as the drivers of the 2.7% growth.
In explaining the polarization effect that is occurring in the markets, Lovelock cites the top three growth markets of Malaysia, India and Indonesia growing at 6.1-7.3%. The low side has countries like Greece, Italy, Finland, France and Poland growing at less than one percent. Greece actually has negative growth in constant currency.
“We don’t normally see growth spreads by country that far apart,” he commented. He also made it clear that Brexit and Donald Trump’s win are not directly responsible for the disparity in the growth of different countries. He does, however, call these as polarizing events.
Spending in banking and securities
Globally, IT spending in the banking and securities subsectors in 2017 will account for 14.5% of total IT spending or US$501.84 billion. Spending on software and IT services are the two fastest growing segment at 7.2% and 4.9% respectively.
Figure 1: Total Banking & Securities IT Spending by Segment, Worldwide 2016-2018
Source: Gartner Worldwide Spending Forecast, January 2017
Although outsourcing continues to account for the biggest share of all services spending at 31.7%, it is the business of consulting that is outpacing every other service at 8.9%. According to Gartner, buyer investments in digital business, intelligent automation, and services optimization and innovation continue to drive growth in the market, but buyer caution, fueled by broad economic challenges, remains a counter-balance to faster growth.
Spending in insurance
It is generally understood that IT spending in the insurance sub-sector would not be too far off from banking and capital markets. Gartner estimates that insurers will spend US$187.5 billion on information technology in 2017, with IT services accounting for 32.2% of total. However, growing at 6.6% from the previous year, spending on software will be nearly 50% faster than that of IT services.
Figure 2: Total Insurance IT Spending by Segment, Worldwide 2016-2018
Source: Gartner Worldwide Spending Forecast, January 2017
“2017 is going to be the year when CIOs return to being builders. On a grand scale there are many new businesses and IT technologies that can be built from the ground up. Digital business is still at its infancy. Blockchain is a very new technology rich in potential but there is no software out there that is going to be implementable, and that means CIOs have to get back to building,” he explained.
