Advanced Computing in the Age of AI | Wednesday, June 29, 2022

IT Spending Remains Steady Despite Pandemic 

Market forecasters continue to crunch the numbers to determine precisely how the pandemic will shape IT spending during a period of unprecedented uncertainty.

Moreover, the need to adapt in the face of COVID-19 is also seen as driving cloud- and AI-based “innovation accelerators” over the next several years.

Continuing regional spikes in coronavirus infections make forecasting IT spending trends that much more difficult, aside from well-documented declines in the brick-and-mortar retail and travel sectors. An IDC survey of the impact of COVID-19 on infrastructure budgets found that just over half of respondents expect either no change or increased spending this year. Forty percent of those surveyed by IDC were anticipating IT budget cuts.

In anticipation of an economic recovery sometime during 2021, two-thirds of those contacted by IDC said they expect to hold the line or increase infrastructure spending next year.

The survey, commissioned by Google Cloud, finds that anticipated growth is being driven by a range of emerging workloads that include AI, data analytics, the Internet of Things (IoT) and data security. “The global pandemic has further increased businesses’ needs for these capabilities,” Carolee Gearhart, Google Cloud’s channel chief, noted in a blog post.

The cloud “growth mode” touted by Google (NASDAQ: GOOGL), IBM (NYSE: IBM) and others focuses on convincing customers to shift more mission-critical workloads to hybrid clouds. That multi-cloud strategy allows customers to keep a close hold on internal data while leveraging pay-as-go pricing models and avoiding vendor lock-in.

Overall, IDC predicts global spending on IT software, hardware and services will reach $1.3 billion this year. As we’ve reported, software services are fueling growth: IDC forecasts IT services that include DevOps and SecOps tools will account for 43 percent of global IT spending this year, or $571 billion. Hardware spending ($435 billion) will make up one-third of IT investments in 2020 while software ($315 billion) accounts for the remaining 24 percent.

Source: IDC/Google

All three represent double-digit growth over 2019.

While the pandemic has boosted revenues for cloud competitors like Google and IBM, with IDC forecasting a 5.7 percent increase in IT spending over the next five years, the market forecaster foresees another emerging driver its dubs the “3rd Platform.”

As the current client/server infrastructure model runs out of steam, IDC says its 3rd Platform framework will advanced beyond cloud and big data to encompass data-generating social media and mobile services that will be driven by 5G wireless deployments.

Add to that mix use cases like deep-learning model training and edge inferencing along with other “innovation accelerators” such as IoT, industrial applications for augmented and virtual reality as well as robotics and additive manufacturing, or 3D printing.

“Innovation accelerator growth rates are expected to be the highest, at 17 percent over the next five years, IDC said. “The 3rd Platform also has low double-digit growth—but only when mobile, the growth of which has slowed, is removed.”

About the author: George Leopold

George Leopold has written about science and technology for more than 30 years, focusing on electronics and aerospace technology. He previously served as executive editor of Electronic Engineering Times. Leopold is the author of "Calculated Risk: The Supersonic Life and Times of Gus Grissom" (Purdue University Press, 2016).

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