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Forrester report offers some tips for buyers of business tech
This year, the growth in spending for business will continue, the study says, but purchases will begin to taper off in 2019.
With spending on business technology expected to remain healthy this year, a recent report from research firm Forrester has some advice for CIOs and others buying business tech.
First of all, says VP and Principal Analyst Andrew Bartels in “The Global Tech Market Outlook for 2018 to 2019” [fee required for full report], they should seek 5 percent or higher growth in their tech budget this year to support process improvements and experiments.
This tracks the expected 5.1 percent global growth in business tech spending that the report forecasts for this year, following 4 percent last year and ahead of a slightly slower rate — 4.7 percent — in 2019, measured in constant currencies. As Forrester suggests: “Make hay while the sun shines.”
Business and governmental purchases of tech goods and services, of course, vary by country. The US, for instance, is expected to hit 6.1 percent this year, while China, India and some European countries will see over 5.5 percent. But Germany, the UK, Saudi Arabia, Italy and Japan will be under 3 percent.
Second, business tech buyers should use cloud solutions — but make sure contracts with vendors protect against boosts in prices and provide exit strategies.
As the report points out, the “cloud transformation is almost complete in many areas,” with cloud services growing at 20 percent rates and on-premises applications showing almost no growth. Software-as-a-service has increased from 14 percent of commercial software in 2014 to an estimated 31 percent by next year. But this has allowed some large vendors to acquire “oligopolistic positions in more and more cloud markets.”
And, third, focus investments on this year’s budget on “initiatives that will help their firms to win, serve and retain customers,” and hold off on upgrades to back-end systems till next year, when those prices are “likely to soften.” By the end of next year, Forrester notes, the “current economic expansion will be 10 years old.”
The report notes that the 2018 forecast looks more stable because of a host of unpredictable factors next year: the impact of the US federal tax cuts, the level of consumer spending, the strength of the dollar. In Europe, there’s the impact of Brexit.
Not to mention, the report says drily, “the potential for a nuclear exchange on the Korean peninsula cannot be dismissed.”