Report: Enterprise IT spend to hit $3.76 trillion this year

Organizations are spending more on their enterprise software to enable cloud-based SaaS services. (Gartner)

Driven in part by the move to the cloud, enterprise IT spending is projected to hit $3.76 trillion this year, which was a 32% increase over 2018, according to a forecast by Gartner.

The shift to the cloud is a key driver for IT spending with worldwide enterprise software spending projected to grow 8.5% this year for a total of $431 billion. Enterprise software is projected to grow another 8.2% next year to reach a total of $466 billion, according to Gartner.

Gartner said organizations were expected to increase their spending on enterprise application software in 2019, with more of their budgets shifting toward software-as-a-service (SaaS) offerings.

As more applications and data are moved to the cloud, enterprises want to deploy SaaS applications such as Office 365. SD-WAN is being deployed by service providers, such as AT&T, Comcast Business, CenturyLink, BT, and Verizon, to help connect large organizations to their cloud data and SaaS solutions.

RELATED: Google, Amazon lead the way on new data centers in 2018

Hyperscale cloud providers have been building new data centers to keep up with the pace of cloud and SaaS-based services for enterprise customers. While data center spending was up 11.3% last year to $202 billion, it's projected to increase 4.2% this year to $210 billion. Data center systems spending will fall to $202 billion by 2020, which is a decrease of 4%.

“Despite uncertainty fueled by recession rumors, Brexit, and trade wars and tariffs, the likely scenario for IT spending in 2019 is growth,” said John-David Lovelock, research vice president at Gartner, in a prepared statement. “However, there are a lot of dynamic changes happening in regards to which segments will be driving growth in the future. Spending is moving from saturated segments such as mobile phones, PCs and on-premises data center infrastructure to cloud services and Internet of Things (IoT) devices. IoT devices, in particular, are starting to pick up the slack from devices. Where the devices segment is saturated, IoT is not.

“IT is no longer just a platform that enables organizations to run their business on. It is becoming the engine that moves the business. As digital business and digital business ecosystems move forward, IT will be the thing that binds the business together.”

Lovelock said that nearly half of the IT workforce is in serious need of developing employee skills to support their digital business initiatives.

"In addition to buying behavior changes, we are also seeing skills of internal staff beginning to lag as organizations adopt new technologies, such as IoT devices, to drive digital business,” said Lovelock. "Skill requirements to keep up, such as artificial intelligence (AI), machine learning, API and services platform design and data science, are changing faster than we’ve ever seen before.”