Enterprise IT spending in the EMEA region will rebound in 2011 and reach $795.2 bn, a 1.3 per cent increase from 2010, analyst Gartner has predicted.
However EMEA will be the only region to show a decline in IT spending in both 2009 and 2010, with enterprise IT spending forecast to total $784.8bn in 2010, a decline of 2.1 per cent from 2009.
Speaking to 3,300 IT leaders at Gartner Symposium/ITxpo 2010 in Cannes, Peter Sondergaard, Gartner senior vice president & global head of research, said that the decline in IT spending in 2010 is “placing EMEA as the slowest region to fully overcome the downturn” Gartner expects Western Europe to record the worst decline in EMEA in 2010 (-3.3 per cent), and experience the slowest long-term growth rate with a compound annual growth rate of 0.8 percent through to 2014, Sondergaard added.
Enterprise IT spending in government in EMEA will decline 2.8 per cent in 2010 and total $139.6 billion, the market-watcher predicted: “It will exhibit slow growth through 2014 as the public sector continues to focus on bringing budget deficits under control during the next five years.”
Looking forward, the ongoing drop in the value of the Euro and the UK pound should promote healthy export growth in Western Europe and with it, positive economic growth. Gartner said as governments scale back their spending and social support, Western Europe is not expected to return to stronger enterprise IT spending growth until 2012.
In 2010, the computing hardware market is the only segment to return to growth in EMEA with hardware spending forecast to total $79.4bn, a 4.6 percent increase from last year. “We are seeing a rise in shipments across hardware due to the low volumes in 2009 and from organizations gradually returning their replacement cycles to a normal length,” Sondergaard said.
Of the hardware segments, storage was the least affected in 2009, and has the best overall outlook through to 2014, as storage capacity demands continue to grow exponentially. Server, printer, and PC revenues will each suffer from migration to lower-cost devices or configurations which will inhibit the spending outlook, particularly in Western Europe.
The IT services market continues to struggle in EMEA, and will be the slowest to return to growth. It is forecast to decline 5.6 per cent, and reach $234.0bn in 2010. Unlike in the past, when IT services spending showed relative resiliency in tight times, a risk-averse and cost-focused mindset is broadly persisting. While a lot of efficiency can be won through a productive focus on controlling cost, the emerging problem is a lack of balance, which inhibits investment in changing the business through new strategies, productivity enhancement, and process and product innovation.
From 2012, Gartner predicts that enterprise software spending in EMEA will surpass growth in spending on hardware, and this trend will continue through 2014 as organisations begin the next software applications replacement cycle.