Growing enterprise SaaS adoption boosts software spending

Gartner believes that Australian spending on enterprise software will grow by $2 billion in 2020

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Spending on enterprise software in Australia will increase by A$2 billion to reach $18.8 billion in 2020, Gartner predicts.

At a global level the analyst firm says that the increasing adoption of software as a service (SaaS) has helped make enterprise software the fastest growing segment in worldwide IT spending.

With spending on technology products and services in Australia expected to reach $99.6 billion, or 5.7 per cent, in 2020 all five segments tracked by Gartner will see an increase this year.

IT services spend is predicted to grow from $34.3 billion to $36 billion and communications services will grow from $27.1 billion to $28.5 billion.

These three segments are all expected to continue to grow throughout 2021 when spending in Australia is expected to reach $103 billion.

However, data centre services and devices will start to see a drop in spending in 2021. Before that both are expected to increase in 2020 with data centre services going from $3.06 billion to $3.13 billion and devices from $12.7 billion to $13 billion in 2020.

In 2021 the numbers will drop with data centre going down to $3.1 billion and devices down to $12.5 billion.

Worldwide, IT spending will continually grow except for devices, which is likely to see a drop in 2021.

Gartner predicts IT spending globally to total US$3.9 trillion in 2020, an increase of 3.4 per cent from 2019, passing $4 trillion in 2021.

“With the waning of global uncertainties, businesses are redoubling investments in IT as they anticipate revenue growth, but their spending patterns are continually shifting," Gartner research VP John-David Lovelock said.

"Almost all of the market segments with enterprise software are being driven by the adoption of software as a service," Lovelock said.

Gartner expects to see continuous spending on software that is not cloud-based in the form of licensed-based software, with its use expanded through 2023.

Growth in enterprise IT spending for cloud-based offerings will be faster than growth in traditional IT offerings through 2022. Organisations with a high percentage of IT spending dedicated to cloud adoption is indicative of where the next-generation, disruptive business models will emerge, according to Gartner.

Copyright © 2020 IDG Communications, Inc.

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