Gartner: AI is driving customer spending

With artificial intelligence (AI) dominating every channel conversation, it’s clearly set to be a major area of growth this year and beyond.

But just how big this growth will be is something Gartner has looked to estimate, with the analyst firm forecasting healthier levels of IT spending from customers as a result of the move to embrace AI.

The analyst house is now expecting worldwide IT spending to come in at $5.26tn this year, an increase of 7.5% from 2023. The impact of GenAI is being felt beyond just those pitching software.

“The compute power needs of GenAI are being felt across the datacentre, and spending in that segment reflects this ravenous demand,” said John-David Lovelock, distinguished vice-president analyst at Gartner.

“Some software spending increases are attributable to GenAI, but to a software company, GenAI most closely resembles a tax. Revenue gains from the sale of GenAI add-ons or tokens flow back to their AI model provider partner.”

The industry is already driving AI spending and is already experiencing some of the positive benefits from rising customer interest.

“The significant increase in datacentre spending is no surprise, given GenAI’s rapid growth and storage demands,” said Chris Harris, vice-president of field engineering at Couchbase. “Recent data highlights that 98% of organisations have specific goals to use the technology this year, but 59% are worried they do not have the ability to manage data and meet the demands of GenAI without significant investment. Datacentres are therefore a logical starting point.

 “But to unlock GenAI’s full potential, organisations require a data management strategy coupled with modern infrastructure. To capitalise on AI investments now and in the future, organisations must ensure they can control data storage, access and usage, enable real-time data sharing, and maintain a consolidated database infrastructure to prevent multiple versions of data.”

Gartner also indicated the demand for IT services was a continuing feature of the market, although down slightly from last year’s levels.

“The change fatigue in CIOs that we saw at the start of the year has now abated and the contract backlogs going back to the third quarter of 2023 are being cleared. We expect to see a larger rush towards the end of the year to make up for the slow start,” said Lovelock.

Matt Pepper, digital transformation manager at WalkMe, said that the idea customers were prepared to evolve their IT systems was positive.

“CIOs recovering from ‘change fatigue’ and driving new innovations is a welcome sight, as is the ambition to do more with AI,” he said. “But organisations need to ensure that their investments will bring the returns they expect. For instance, adding AI co-pilots, or capabilities to generate images or text can provide significant returns, but only if employees find these tools actually improve their words and remove – instead of adding – complexity.”

He hinted at a channel opportunity to guide customers through AI adoption to make sure the experience matched up to expectations.

“To ensure new capabilities are successful, organisations need to truly understand how they interact with the way employees work, and offer a consistent, contextual experience that lets users take the right actions, at the right time, with the right tool. If they can take the right approach, then the predicted trillion-dollar investment in software will provide real returns,” he added.