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Forrester: IT spending facing challenges in 2013

Particularly in Europe, and in servers and storage

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The prognosticators have been reading their tea leaves, analyzing entrails, and gazing into their balls to try to figure out what the IT spending picture will look like, and the news from Forrester Research is much the same as El Reg is seeing elsewhere: growth will be a bit slow in the current year, and improving out beyond that.

To be specific, principal analyst Andrew Bartels, has released the latest Forrester IT spending forecast, which closes the book on 2012 and looks ahead to 2013 and 2014. IT spending growth was a tiny bit slower in 2012 than expected, increasing only 1.2 per cent compared to the August forecast which put it at 1.3 per cent over 2011's levels. That tenth of a point might not seem like much, but when you are talking about nearly $2 trillion in spending, those decimals really start adding up.

As gauged in US dollars, Bartels and his team reckon that IT spending will be up 3.3 per cent to $2.09 trillion, and if you reckoned the sales in local currencies around the world, the growth would be more like 5.4 per cent.

Of this, software is the biggest chunk of the spending, accounting for $542bn in revenues as calculated in US dollars in 2013, up 4.4 per cent. Sales of IT hardware consumed by companies (both inside and outside of the IT department, officially or unofficially) will be close behind at $416bn, an increase of 2.1 per cent.

IT consulting and systems integration – one of the big IT job producers these days – will rake in a $404bn pile of cash, up 3.6 points. A category combining IT outsourcing and hardware support services will bring in $399bn (up 5.2 per cent) this year if the Forrester projections pan out, Sales of communications equipment (the gear used by telcos and services providers as well as switching and routing in enterprise data centers) will bring in $328bn. (Unlike rivals Gartner, which also unleashed its own forecasts as the year turned, Forrester does not track and add in telecommunication services.) That will represent only a four-tenths of a point increase over 2012, which is nothing for communications gear makers to crow about.

Hardware was not a fun business to be in unless you were Apple in 2012, with flat PC sales and a 4 per cent decline in server revenues for the year, according to Forrester's analysis. This is subject to revision, of course, since the IT equipment makers have not started reporting their fourth quarter financial results yet.

The only reason why PCs were flat in 2012 is because Forrester counts them as PCs, and it is tablets that are going to help push up PC sales this year by around 4 per cent in the current projections put forth by Bartels. Those projections call for both server and storage revenues to decline, and for other peripheral sales to only increase by 3 per cent, a slowdown compared to 2012.

By geography and reckoned in local currencies, Bartels says IT spending will rise by 7.5 per cent in the United States this year, with Europe slowing to eight-tenths of a per cent growth in local currencies and translating into a 3.2 per cent drop as measured in US greenbacks. The Asian IT sector will see 4 per cent growth in 2013, which works out to 2.9 percent growth when converted to US dollars.

By 2014, as measured in local currencies, global IT spending will rise by 6.7 per cent in 2014 as Europe works through its recession and the economies will strengthen in North America and Asia. The forecast for 2014 calls for the US dollar to stop falling against other currencies, which will convert that 6.7 per cent IT spending growth to a 6.1 per cent growth to $2.22 trillion in 2014.

As you might imagine, big data, analytics, mobility, cloud computing, and collaboration are the big drivers of IT spending growth in the coming year.

"In software, business intelligence and analytics apps will big the hot products, along with smart process apps for collaborative business processes," Bartels wrote in a blog posting about the forecast.

"The latter, which are primarily sold on a software-as-a-service basis, will help SaaS subscription revenues grow two to three times faster than combined license-and-maintenance software. In computer equipment, Apple tablets and Mac PCs will continue to take share from Windows PCs, with the introduction of Windows 8 PCs and tablets helping Microsoft to end the decline of 2012 but not bringing much growth until 2014." ®

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