IT Spending Expected to Rise in 2019 Amid Shift to Cloud Services

Gartner projects 3.2% growth in IT spending even as broader trends point to a slowing economy

The CeBIT fair in Hannover, Germany, last year, where exhibitors showcased artificial intelligence and cloud-based services. Photo: focke strangmann/epa-efe/rex/shu/EPA/Shutterstock
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Global spending on information technology is expected to reach $3.8 trillion in the year ahead, up 3.2% from 2018, as corporate IT budgets continue to shift into cloud services and away from on-premise data centers, according to Gartner Inc.

IT spending last year was projected to total $3.7 trillion, up 4.5% over 2017, as more firms began to invest in emerging digital tools, like blockchain, Internet of Things and artificial intelligence, Gartner said.

Driven by cloud-based software subscriptions, spending on enterprise software is projected to grow 8.5% this year, compared with 9.3% in 2018, to a world-wide total of $431 billion, Gartner said in a report Monday.

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Companies are expected to boost spending this year on enterprise application software and software-as-a-service, John-David Lovelock, a research vice president at Gartner, said in a statement.

But spending growth on data center systems is expected to slow to 4.2% this year, from 11.3%, to a total of $202 billion.

The results are based on an analysis of sales by thousands of tech vendors across a range of IT products and services.

“There are a lot of dynamic changes happening in regards to which segments will be driving growth in the future,” Mr. Lovelock said.

A slowdown in purchases of devices, for instance—including mobile phones, PCs and other “saturated segments”—is likely to be offset by an upturn in spending on technology used in Internet of Things networks, he said.

The forecast for overall IT spending gains comes as broader trends point to a possible economic downturn, amid uncertainties around Brexit, trade battles and tariffs—signaling a change in the role of IT, Mr. Lovelock said. IT is “becoming the engine that moves the business,” as opposed to merely a platform on which firms run their business, he added.

In a separate report last week, Forrester Research said digital technology is playing an increasingly central role in the success of companies across a range of industries. As a result, boundaries between IT and business-side decision-making are fading, “with much more powerful and fluid IT capabilities immersed in the very core of the business,” Forrester said.

To cope, most firms are increasing the frequency of budget cycles based on shifting needs, it said.

Write to Angus Loten at angus.loten@wsj.com