1. 34 • monitor • NOV/DEC 2016
that almost 2% of this decline is due to exchange rates,
tablet sales — down 13% on the consumer level — are
also to blame.
The decline in device sales can also be linked to
another surprising factor. “A lot of this comes down to
Windows 10, which has actually put off the need to
upgrade PCs,” Lovelock says. “So where we normally
have a three to five-year replacement cycle on PCs,
Windows 10 has added another year almost to PCs.
Last year and this year have been extremely bad years
for PC replacements and for PC spending, but by 2018,
we will be back to a more normal replacement cycle. We
still won’t get into the positive growth, but we will only
be dropping about 0.2%.”
Looking Ahead to 2017
Although Gartner does not expect the overall decline
to continue into next year, worldwide IT spending is
expected to grow a nominal 2.9% in 2017. “There’s still a
big malaise going on,” Lovelock says. “We still have not
shaken the effects of 2009 and 2010, so where revenue
expectations used to be much higher than they are now,
corporations are looking at moderate growth in their top
line, which means moderate growth in IT budgets.”
Despite the lackluster growth, Lovelock says some-
thing much more important is happening. “Corporations
are in a nearly constant cost optimization mode, trying
to decrease their cost of operations, not to return those
dollars to the business, but to reinvest in different IT.
They’re moving from legacy systems, and their core
systems are getting upgraded and modernized.”
This phenomenon explains why the largest source
of anticipated growth in 2017 is software, followed by IT
services. “These are the things that are actually driving
the new digital business initiatives,” Lovelock says.
A
lthough technology has become such a
vital aspect of life today, Gartner’s Q3/16
Worldwide IT Spending Forecast predicts that
overall IT spending in 2016 will decline by 0.3%. John
Lovelock, chief forecaster for the IT research and advi-
sory company, says exchange rates have contributed
to this result.
“We have to be careful, first and foremost, on the rise
of the U.S. dollar,” Lovelock says. “The -0.3% is in U.S.
dollars. When you switch to constant currency, there’s
actually growth of 0.9%. Every country is growing a little
bit. There is more IT activity, but with the change of
currency in exchange rates, that is translating into fewer
U.S. dollars. It’s still not a good year — 0.9% is nothing
to cheer about — but it’s marginally positive as opposed
to the -0.3%. If we take the UK out, we actually get to
0.2% growth in U.S. dollars.”
Declining Device Sales
Contributing the largest percentage of the overall 0.3%
decline is devices; spending in this category is predicted
to decline by 7.5% in 2016. Although Lovelock says
So Long IT Equipment:
DigitalAlternativesAreHeretoStay
BY RITA E. GARWOOD
The forecast for worldwide IT spending in 2016 looks grim, but John Lovelock, Gartner’s chief forecaster,
says there’s more to the story than the negative number. He shares the reasons behind the decline, a
forecast for 2017 spending and discusses IT’s next big achievement — civilization infrastructure.
JOHN LOVELOCK
Chief Forecaster, Gartner
“Once the farm equipment can start talking about all of its parts,
maintenance and replacement becomes on-need rather than on
schedule. As service and parts ecosystems come in touch, these
things all become automated, so the farmer ends up with a tractor
that has almost zero downtime and livable maintenance costs,
which get passed on as savings for everyone.”

2. NOV/DEC 2016 • monitor • 35
2020, Gartner predicts that 30% of web browsing sessions will be done
without a screen. “These voice interactive systems that are out today
— Siri, Ok Google and Cortana, among others — they’re all going to
start having more influence over how we interact with the internet.
Rather than going to a screen and saying, ‘What’s the weather?’ You
can ask, ‘Do I need an umbrella?’ — which is really what you want to
know, not if it’s raining.”
As these avatars of the digital giants start to insert themselves
between the consumer and the other participants of the internet,
Lovelock says they will become the buying avatars for individuals.
“Instead of going to a website and buying tickets for the movies that
night, I can ask Siri, Cortana or OK Google to buy me tickets, and it
will do that on my behalf,” he says, adding that businesses will need
to start selling to these artificial intelligence bots while maintaining a
web presence that is still desirable for people.
Digital Alternative Takeover
Overall, Lovelock says the big story in the IT market is the ongoing
shift away from traditional equipment. “Digital alternatives are here
and they’re viable today,” he says. “Licensed software is being replaced
with SaaS software. Servers are being replaced with compute-as-a-
service. Phone lines are being replaced with voice-over IP. For every
piece of traditional IT equipment that we used to have, we have a
digital alternative now that is viable and cost effective, and people are
taking it on. As we go forward, the Internet of Things (IoT) is going
to start rolling over the top of regular things. Cars are becoming self-
driving. Equipment is being fixed on an as-needed basis as opposed
to as scheduled.”
Lovelock mentions the efforts of Trenatalia, the primary train oper-
ator in Italy, which has been working to reduce its maintenance budget
by embedding sensors and other IoT devices on the trains. “They
expect it to save them a €1 million ($1.1 million) a day, and they’re
already saving about €2 million ($2.2 million) a week.”
Despite the advances in IT, Gartner’s forecast period, which
extends to 2020, does not contain a period of economic improvement.
“We don’t see us getting to that 8% to 10% growth again,” he says,
referring to pre-Great Recession growth levels. “But frankly, if the world
hits another recession, it’s likely to surprise us.” m
RITA E. GARWOOD is managing editor of Monitor and ABF Journal.
“They need the software, services and support, so rather
than buying things like servers and storage, they’re
using software as a service. Rather than putting things
on their own network, they’re using cloud computing.
They’re going forward with many of these new business
initiatives, but they’re doing it using digital business
alternatives rather than traditional technology.”
A Civilization Infrastructure Future
In the next decade, Gartner expects IT’s most important
achievement will be the creation of a new civilization
infrastructure, which will reshape business and how
people live. “Every business will be competing as an
ecosystem business, which means being able to reach
out and take advantage of digital ecosystems that exist
in order to bring their product to market and effectively
contribute in a collaborative way with other businesses
without the need for strict collaboration,” Lovelock
says. “Digital business ecosystems are the foundation
upon which all of that will occur. In the same way that
highway and truck shipping connect businesses, the
digital business ecosystems will connect the businesses
of the future.”
An example of this new infrastructure can be found
in the agriculture industry, where digital tractors that
utilize global positing for tracking and programmable
seed planters are already for sale. According to Lovelock,
the agricultural equipment ecosystem will digitally inte-
grate with the seed ecosystem, which can provide infor-
mation on the right seed to plant in the right field, given
moisture, density and sun exposure factors.
“When those two things start to work together, you
can get a planter that gets weather information, satel-
lite positioning, even crop information, so farmers can
make better decisions about when and where to plant,”
Lovelock says. “Instead of planting the same field with
one seed, you can actually plant the same field with
different types of seeds, including drought tolerant,
water tolerant and sun tolerant varieties. That is all
controlled by the combinations of these systems that
are coming together.”
According to Lovelock, the early results of this
combined technology are showing anywhere between
8% and 12% crop increases, and proponents believe this
has the potential to increase up to 25%.
New technology is also playing a vital role in equip-
ment maintenance. “Once the farm equipment can start
talking about all of its parts, maintenance and replace-
ment becomes on-need rather than on schedule,”
Lovelock says. “As service and parts ecosystems come in
touch, these things all become automated, so the farmer
ends up with a tractor that has almost zero downtime
and livable maintenance costs, which get passed on as
savings for everyone.”
Browsing Without a Screen
Another shift in the IT industry is on the horizon. By
“Licensed software is being replaced with SaaS software. Servers
are being replaced with compute-as-a-service. Phone lines are being
replaced with voice-over IP. For every piece of traditional IT equipment
that we used to have, we have a digital alternative now that is viable
and cost effective, and people are taking it on. As we go forward,
the Internet of Things is going to start rolling over the top of regular
things. Cars are becoming self-driving. Equipment is being fixed on an
as-needed basis as opposed to as scheduled.”