An Early Look at Corporate IT Investment Trends in 2016

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Jan 20, 2016 2:13:38 PM

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An Early Look at Corporate IT Investment Trends in 2016

It should come as no surprise that the average corporate budget has become more focused upon technology and communications in the past few decades. IT now stands at the center of most organizations, as virtually every department relies on services and support from technology workers and managed vendors on a daily basis. Considering the fact that even more progressive trends are taking shape today, investments will only continue to rise for the foreseeable future.

Where money is being directed is far from the only trend to watch in IT provisioning and management, though. Last July, Forbes contributor Adrian Bridgewater wrote an interesting blog post about the transition of power and authority away from boardrooms and toward a broader range of individuals. The author stated that chief executive officers, chief information officers and chief financial officers are still very much active, but that lower-ranking staff members are also gaining some ground in these matters.

At that time, Bridgewater argued that the average leader could get a lot out of this trend when approaching it properly, specifically in terms of designating the authority carefully and bringing more individuals into initial provisioning discussions. He did warn that the wrong balance of power could lead to "fragmentation," which can in turn cause the company's provisioning processes to lose focus and take longer periods of time to complete - both of which causing disruption.

If you would like a quick rundown of some of the ways in which companies are approaching more popular trends in technology, check out this short video from The Street:

Looking forward, small-business owners will need to remain vigilant and focused on IT investment decision-making, as failure to do so can lead to financial risk, poor operational performances and a lack of a competitive edge. Thankfully, the economy has improved in each of the past two years, and more progressive gains are expected to hit the American private sector in 2016, meaning that there will be more capital available to allocate toward desired technologies. 

A look at overall spending
Gartner recently released its latest forecast related to IT spending in 2016, and predicted global investments to reach $3.54 trillion in the next 12 months, which is notably only modest growth compared to 2015. Interestingly, the analysts pointed out that the $3.52 trillion spent on technology in 2015 was $216 billion fewer than the total recorded in 2014, and that this decrease was the most significant in years. 

Perhaps even more surprising, the researchers argued that the world will not see another prolific year in spending like 2014 for another few years, although there are several reasons for these trends that do not reflect the motives of leaders. 

"The rising U.S. dollar is the villain behind 2015 results," Gartner Research Vice President John-David Lovelock explained. "U.S. multinationals' revenue faced currency headwinds in 2015. However, in 2016 those headwinds go away and they can expect an additional 5 percent growth."

Business technology investments are growing and transforming today. Business technology investments are growing and transforming today.

Gartner then broke down the various categories where IT dollars are expected to be spent in 2016, with communication services having the greatest piece of the overall pie at $1.47 trillion. IT services spending is forecast to enjoy 3.1 percent growth this year compared to 2015, reaching a total size of $940 billion globally. The largest point of focus appears to be in the software arena, which will see the highest growth margin of any category at 5.3 percent. 

Finally, data center technology will see 3 percent growth, while investment in devices will drop significantly by 1.9 percent this year. At the end of the day, should these predictions come to fruition in 2016, American businesses should be in a desirable position with respect to IT capabilities and financial performances. 

One of the more obvious and important areas to watch will assuredly be cloud computing, which saw even more transformations with respect to service arrangements and purchasing preferences in 2015 than in the past. 

"Companies spent $7.6 billion on cloud infrastructure in the third quarter of 2015."

Cloud infrastructure in transition
International Data Corporation released its quarterly tracker of the global IT infrastructure spending market for the third period of 2015, and stated that the industry saw 23 percent growth compared to the same span of time in 2014. This amounted to $7.6 billion spent on cloud-based IT infrastructure services and solutions alone, and bodes well for the coming months. 

"IDC continues to see healthy double-digit growth in cloud IT deployments in the market with an increasing preference for public cloud infrastructure," IDC Research Director Kuba Stolarski explained. "Customers are modernizing their infrastructures, having a progressively larger number of viable options for cloud deployments either on or off premises. These customers depend on a mix of as-a-service offerings and traditional infrastructure to help meet the IT transformation requirements of their organizations. As public cloud offerings continue to evolve and improve in reliability and security, customers are becoming more comfortable with the flexibility that they get by deploying certain workloads in these elastic environments."

The increasing investment going into the public cloud infrastructure market, specifically, has been a consistent trend for a while now, as companies begin to better understand the various capabilities and potential shortcomings of the technology compared to private models. The analysts estimated that public cloud infrastructure saw a 25.9 percent increase between the third quarters of 2014 and 2015, while private options saw 18.8 percent growth. 

Furthermore, in the third quarter of 2014, cloud computing took up about 28.7 percent of the total IT infrastructure marketplace, but this figure increased once again in 2015 to 33.8 percent. Cloud services will remain some of the more sought-after technologies and solutions for the foreseeable future, and small-business owners will want to keep up with what the market's transformation means to their specific companies. 

When working with the right managed service provider for IT infrastructure and technology needs, entrepreneurs can dramatically improve the outcomes of deployments and subsequent returns on the various investments. 

Topics: SMB Solutions