The years 2020 and 2021 have been largely about juggling the impact of the global pandemic. As the situation was pretty uncertain, businesses found themselves between a “rock and a hard place”, when it comes to making big decisions.
Most large scale business decisions involve millions, or maybe billions of dollars. When there is so much uncertainty around, business leaders find themselves incapacitated to take major decisions.
Outlook for the Year 2022
In the year 2022, research giant Gartner anticipates that enterprises will be moving away from stop-gap arrangements that were resurrected to deal with the pandemic. Instead, enterprises will be making strategic investments in technologies like Cloud Computing.
Most of the makeshift infrastructures created post pandemic not only lacked a good end user experience, but were also insecure on many counts. According to Gartner, a move towards well secured IT infrastructures is another reason for this high spending.
Leading Areas of IT Spending
According to Gartner, the three sub-segments of IT that will receive most of the spending are enterprise software, IT services and data center systems. With data center systems as a major area of spend, most of these data centers will be those of Cloud Service Providers.
Enterprises are gradually but surely moving away from on-premise data centers. They not only accompany management related challenges, but are also a huge drag on the deploying company’s financial resources.
When we analyze the IT spending figure of US $4.5 Trillion during the year 2022, it translates into a Year on Year (YoY) growth rate of over 5%. This growth in spending is being compared with the IT spending figures of year 2021.
Enterprise Software Dominates
Out of the above IT spending figure, the enterprise software segment is likely to show the highest growth of 11%. In dollar terms, this translates into a whopping US $672 billion. This trend clearly points out that enterprises are now prioritizing digitalization initiatives.
Interestingly, the Cloud Computing market is an integral part of the enterprise software segment. This is one of the major reasons that this spending figure is not only huge in itself, but the YoY growth in spending is also quite impressive.
Cloud Surpasses the Non-Cloud Market
Although this event happened back in the year 2020, when the Cloud Computing market’s size surpassed the non-cloud market, the trend is showing no signs of slowing down. More enterprises than ever are giving preference to cloud solutions and deployments in IT.
Gartner anticipates that by the year 2025, the Cloud market will be double that of the non-cloud market. What this means is that there will be a further “change of hearts”, as enterprises will replace on-premise IT deployments with Cloud Computing services.
Software as a Service (SaaS) Dominates Growth
As per Gartner’s analysis and statistics, the Software as a Service (SaaS) segment is responsible for the bulk of growth within the enterprise software space. This is a clear indication that enterprises are pivoting towards operational agility and efficiency.
This flexibility and agility that is delivered by enterprise grade software hosted over the Cloud is immensely improving operational efficiencies and customer experiences. This in turn in helping businesses create more value down the funnel.
IT Management and Consultancy to Outshine
The overall market for IT management and consultancy services is well in line for the second highest growth in spending in the year 2022. Gartner expects this growth to be just shy of the 8% threshold.
This translates into a spending figure of nearly US $1.3 Trillion. External consultants will be playing an instrumental role in helping enterprises plan, execute and manage cloud strategies as well as deployments.
Some of the major reasons cited by Gartner for this trend include an acute shortage for skilled cloud professionals, wage inflation and the skills gap of staff when it comes to dealing with cloud environments and their seamless integration.
Towards the end, Gartner reckons that 2022 will be the year which sees a revival of the role of Chief Information Officers (CIOs). CIOs and Chief Information Security Officers (CISOs) will be playing an instrumental role in implementing various digitalization initiatives.
It is important for enterprises that are betting big on Cloud Computing that they build the capacities and skillsets of their existing human resources. This will reduce the reliance of such enterprises on external consultants, while also reducing costs.