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Bulk of IT spending going through the channel
The amount of money spent on technology might have been hit by macroeconomic conditions, but the majority of what is being transacted is going through partners
IT spending might have come under strain this year, but the silver lining is that the vast majority of the investments made by customers will come via the channel.
According to research from Canalys, the total addressable IT market will grow 3.5% this year, and more than 70% of that, $3.4tn, will be delivered by the channel.
The analyst is forecasting growth across EMEA of 3.4% this year, with 2.8% in North America, which is down from 8.5% in 2022, along with improvements from APAC, up by 4.5%, and Latin America at 3%.
There is a mixed picture in terms of where growth will come from, with cyber security, network infrastructure, and cloud and software sales experiencing growth. On the flip side, servers, storage and client devices will continue to be tough places to sell.
But the continuing interest in digital transformation, moving to the cloud and securing data will continue to drive spending this year and provide the channel with revenue.
“The long-term technology mega-trends will continue to drive growth opportunities for both vendors and channel partners in 2023,” said Matthew Ball, chief analyst at Canalys.
He added that there were several areas of interest for the channel to focus attention in the final few months of 2023 and beyond. “Digital transformation, cyber security, compliance, sustainability and the emergence of generative AI [artificial intelligence] will underpin IT services engagement, the adoption of new software and infrastructure refresh,” he said. “But there are still major headwinds for the industry to navigate. The threat of recession, rising interest rates, high inflation, trade disputes and extreme weather events will continue to cause much disruption and affect confidence.”
Spending improvements
Canalys has been tracking the year, and saw some signs of improved IT spending in the second half, with a gradual easing of budgetary constraints. There had been some hope that the last few months of 2023 would see a rebound, but that is now being pencilled in for 2024.
The expectations are for both private and public sector to kick off a technology refresh next year, with delayed projects coming through along with fresh schemes. Initial forecasts from Canalys are for growth in the region of 6.9% in IT spending with the money spent globally on technology breaking through the $5tn barrier for the first time.
The advice from Canalys to the channel was to understand the dynamics of the current market and make sure they had a story that would interest customers.
“Delving deeper into these numbers is vital for industry leaders and decision-makers to understand the implications for their businesses and gain a greater understanding of their total addressable, serviceable available and serviceable obtainable markets,” said Ball.
Channel players have reported tougher market conditions but accompanied those statements with comments about taking market share and the continued prospects for pockets of growth.
Public channel firms have consistently shared growth figures so far in 2023, and those with a presence in security and networking infrastructure have shown particular strength.
