IT Spending up in Services, Slows in Computers

By | Jan 9, 2013

Low cost tablets are expected to influence IT spending in 2013 and 2014, driving down overall investment in computers as higher cost PC sales languish. Companies saving money on hardware will spend it in data applications and Software as a Service (SaaS). The shift in spending confirms the trend highlighted by slow Windows 8 sales, a move toward implementation of BYOD policies, and the development of mobile apps for delivering content and services. IT departments in midsize businesses should adjust their budgets to accommodate the changing IT environment. Employees are using more and more mobile devices for all but the heaviest applications and legacy software.

Tablets and Computers

InfoWorld details how the IT market will evolve over the next two years. Projections from research firms Gartner and Forrester indicate that IT spending will remain essentially flat after a four percent boost this year. Within that total they project four major shifts. While the number of tablets will increase, spending will grow more slowly due to competition from lower-priced devices. The same trend will slow down overall computer spending as the tablets take over functions from desktop computers.

ComputerWorld describes how the anticipated increase in PC sales after the release of Windows 8 did not take place. The upgrade rate to Windows 8 is about one third of the rate Windows 7 experienced, and it even lags behind that of Vista. Overall, the demand for Windows PCs is slowing, and the demand for Windows 8 machines is low. The possible boost from Windows RT tablets is absent.

Software and Services

Software will continue to see strong investment and some services will grow quickly. Security and information management applications will see strong growth. In cloud services, SaaS will grow 25 percent in each of the next two years to reach $75 billion.

The numbers confirm what IT professionals have seen in individual cases when working with customers: a major reorientation in the IT environment is under way. Forward-looking companies are embracing the move to mobile by reducing investment in desktops and purchasing mobile device management solutions in the form of SaaS. Midsize companies are transitioning noncritical company applications to the cloud, and either writing their own apps to give mobile access or buying SaaS solutions off the shelf. This change allows them to reduce capital investment in an uncertain economic environment and to transfer expenditures to current expenses as service costs. At the same time, while the introduction of mobile devices into the workplace generates expenses, the tablets and smart phones themselves are bought by the employees in most cases. Companies see a reduction in financial risk and greater flexibility on the IT side. The added security risks for BYOD and mobile computing are seen as manageable, but the effect can be seen in an increase in spending on security. Allowing employees to work on their own mobile devices is also thought to increase job satisfaction and productivity, but that aspect of the transition to mobile remains to be confirmed.

This post was written as part of the IBM for Midsize Business program, which provides midsize businesses with the tools, expertise and solutions they need to become engines of a smarter planet. Like us on Facebook. Follow us on Twitter.

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