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Gartner: Brexit will affect IT investments worldwide

Leave vote will cause price hikes and long-term uncertainty – both in UK and worldwide, says Gartner

frustrated man with steam coming out of his ears

The UK leaving the European Union will lead to an erosion in business confidence and price increases which will impact UK, Western Europe and worldwide IT spending, according to the latest report by Gartner.

The analyst firm believes the leave vote will quickly affect IT spending in the UK and in Europe while other changes will take longer. Staff may be the largest immediate issue. The long-term uncertainty in work status will make the UK less attractive to new foreign workers. Retaining current non-UK staff and having less access to qualified new hires from abroad will impair UK IT departments.

Dell partners have already reported a ten percent price increase on its products as of July 1.

Elsewhere, Gartner expects worldwide IT spending to be flat in 2016, totaling $3.41 trillion (see Table 1), up from last quarter’s forecast of negative 0.5 percent growth. The change in the forecast is mainly due to currency fluctuations.

“2016 marked the start of an amazing dichotomy. The pace of change in IT will never again be as slow as it is now, but global IT spending growth is best described as lackluster,” comments John-David Lovelock, research vice president at Gartner.

“2016 is the year that business focus turns to digital business, the Internet of Things and even algorithmic business. To fund these new initiatives, many businesses are turning to cost optimisation efforts centering around the new digital alternatives (for example, SaaS instead of software licenses, voice over LTE [VoLTE] instead of cellular and digital personal assistants instead of people) to save money, simplify operations and speed time to value. It is precisely this new breadth of alternatives to traditional IT that will fundamentally reshape what is bought, who buys it and how much will be spent.”

Table 1. Worldwide IT Spending Forecast (billions of US dollars)

 2015 Spending2015 Growth2016 Spending2016 Growth
Data Centre Systems171,2132.9%174,5782.0%
Software313,9481.1%332,2075.8%
Devices662,295-4.6%627,235-5.3%
IT Services865,818-3.4%897,6343.7%
Communications Services1,400,049-9.2%1,380,782-1.4%
Overall IT3,413,324-5.5%3,412,4360.0%

Source: Gartner (July 2016)

The Gartner Worldwide IT Spending Forecast predicts datacentre systems spending will reach $174bn in 2016, a two percent increase from 2015. It says the market is driven by strong growth in the server markets in Greater China and Western Europe, and a strong refresh cycle in the North American enterprise network equipment market.

Global enterprise software spending is on pace to total $332bn, a 5.8 percent increase from 2015. Gartner says North America is the dominant regional driving force behind the growth, responsible for $11.6bn of the $24bn dollar increase in 2016. At a segment level, the fastest-growing market continues to be customer relationship management (CRM) software.

Devices spending is projected to total $627bn by the end of 2016. The lacklustre economic issues surrounding Russia, Japan and Brazil will hold back demand and worldwide PC recovery in 2016. Additionally, Windows 10 upgrades have further led to PC buying being delayed — consumers are willing to use older PCs longer, once they are upgraded to Windows 10.

Spending in the IT services market is expected to increase 3.7 percent, totalling $898bn, with Japan the fastest-growing region for IT services spending with 8.9 percent growth.

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