Companies to change spending systems next year

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IDC has been consulting its Tarot cards and thinks that next year will see massive changes for the channel as firms change their methods of buying IT.

What IDC said is that next year firms will start making technology purchases funded by a line of business purchasing. Digital transformation is driving the change with the analyst house expecting $1.67 trillion to be spent on technology this year with 50.5 percent coming from the IT budget and 49.5 percent being spent by lines of business.

But line of business spending has been growing at a faster rate and between 2016-21 will come in at 6.9 percent a year, compared to 3.3 percent for IT spending.

IDC has looked at the impact of changing buying patterns in vertical markets and concluded that by 2021 only construction and telecommunications will see tech spending led by the IT department.

IDC Customer Insights & Analysis programme director Eileen Smith said that as business functions worldwide embrace 3rd Platform technologies to accelerate time to market, enable new business models, and increase revenue, leaders within these functions are looking to drive decision making and manage the budget of these investments.

“On average, the worldwide line of business functions will fund 50 percent of their total technology purchases in 2018, but with the ease of cloud software, business functions on average will fund an astounding 70 percent of application investments this year”, she added.

The IT department will continue to spend on outsourcing, project-orientated services and networking equipment. Both will spend on the cloud, but more will be spent on IaaS outside the IT office.

In Western Europe, LOBs will accelerate their investments in technology, particularly in the cloud software space. Business managers are becoming more independent, relying less on IT departments to purchase applications or devices. Business-funded spending will experience 6% growth in 2018, four times faster than that of IT departments, showing that many European companies are more exposed to shadow IT spending.