Businesses plans are changing. Here's what that means for IT spending

Gartner predicts that IT spending is only set to increase as businesses switch from survival to growth mode.

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Priorities are shifting, and the new goals set for 2021 by CIOs require doubling down on IT budgets.   

Image: Thomas Barwick / Getty Images

After a restless year spent supporting the business through the COVID-19 pandemic, IT departments are now gearing up for another busy few months. According to tech analysis firm Gartner, worldwide IT spending will increase by 9% in 2021 to reach a total $4.2 trillion, driven by companies' needs to accelerate their digital transformation efforts. 

Spend on data center systems, enterprise software, devices, IT services and communications services will grow at pace, predicts Gartner, even after 2020 already forced many business leaders to invest heavily in new technologies to support their workforce as they stayed stuck at home due to the health crisis. 

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This is because priorities are shifting, and the new goals set for 2021 by CIOs require doubling down on IT budgets. While the last year placed businesses in survival mode, leading to short-term digital transformation projects that had to be implemented at pace, 2021 will be all about bigger initiatives with longer time frames. 

"Last year was focused on continuing to operate business the way that it was," John-David Lovelock, research vice-president at Gartner, told ZDNet. "Now we're in 2021, it's about starting to change the way that the business will meet the realities of 2021 and beyond. We're looking at opening up our time frame for longer-term projects."  

SEE: Guide to Becoming a Digital Transformation Champion (TechRepublic Premium)

From working from home, employees will now be looking at working from anywhere, which will require new behavioral and wellness applications to make sure staff is supported, but could also cause another refresh cycle for devices.  

As Lovelock explained, a four-year old laptop found in the corner of the office was a suitable option to present to an employee while the COVID-19 crisis was at its most disruptive, but 2021 will come with higher expectations for WFH equipment.  

Companies' spend on devices – whether it's PCs, laptops, tablets or mobile phones – is expected to be one of the fastest growing, according to Gartner, with almost $800 billion invested in 2021, up 14% from 2020. 

But even more than continuing the digital transformation trends observed last year, Lovelock predicted that 2021 will see IT departments investing to build brand-new technologies that can differentiate a business in a crowded market to generate more revenue. 

"The priority for the CIO is to find out what technology they can bring in that fundamentally supports or transforms the value proposition of the company," said Lovelock. "I can't differentiate my business on software or technology that anybody can buy. So in order to differentiate my value proposition, I have to build the solution to do that." 

Gartner has identified what the firm describes as "build markets", which include tools like application planning software and non-relational databases, that are expected to grow at a fast rate as IT leaders look at innovative ways to create new tools.  

Innovation is also expected to come from new places. Gartner expects that by 2024, 80% of IT products and services will be built by non-developers, partly thanks to low-code and no-code software tools that will give business users the means to create business-specific mobile or web applications that they need. 

SEE: What is a CIO? Everything you need to know about the Chief Information Officer explained

This, in turn, will place new requirements on IT teams, as they suddenly find themselves managing and supporting a large number of business applications. "A whole bunch of those things are going to come up, and if they go corporate-wide or department-wide, then IT has to start to manage and support them," said Lovelock. 

"There will be a transition from IT managing 100 applications supported by external service providers to what could now be more than 1,000 applications developed internally." 

The next year will be spent thinking outside the box and building technologies and services that don't yet exist to boost business revenue in a new, post-crisis reality. From merely keeping business afloat while optimizing costs, therefore, companies are now heading for a new budget phase in which digital transformation plans will be expected to drive real growth.