IT spending in Australia to grow 7.8% in 2024

IT spending in Australia is projected to surpass A$133bn in 2024, an increase of 7.8% from 2023, according to the latest forecast by Gartner.

The growth in spending will be led by investments in cyber security, cloud platforms, data and analytics, as well as application modernisation, with spending on software set to grow by 12.8% in 2024.

Speaking at the Gartner IT Symposium/Xpo on the Gold Coast this week, Andy Rowsell-Jones, distinguished vice-president analyst at Gartner, said the projected growth in IT spending suggested that more money will be available to IT departments with Australia’s inflation rate expected to decline to about 3.25% by the end of 2024.

In terms of priorities, he noted that cyber security is at the top of the spending list, with every organisation’s risk and audit committee worrying about a potential cyber security fallout and that various industry regulators are actively pushing for improved capabilities.

At the same time, many Australian CIOs are also focused on optimising infrastructure and operational costs and efficiencies, by further investing in cloud and digital enablement to deliver higher business outcomes and revenue.

Indeed, over 62% of Australian CIOs expected to increase investments in cloud this year, while reducing IT spending in their own datacentres. This was reflected by slower growth in datacentre systems spending in 2023, experiencing a 6.4% decline, but Gartner forecasts this will rebound to 5.1% growth in 2024.

“This turnaround in spending on datacentre systems next year in Australia will primarily be driven by increased investments in secure access service edge [SASE] technologies,” said Rowsell-Jones. “Local CIOs have told us the top two technologies they plan on investing in next year are SASE to simplify the delivery of critical network and security services via the cloud, and generative AI for its potential to improve innovation and efficiencies across the organisation.”

Investments in generative AI technologies are expected to grow in 2024, particularly tools for software development and code generation. However, generative AI will primarily be incorporated into enterprises through existing spending in the long-term, through software, hardware and services they are already using.

“Generative AI tools are reducing the barriers to entry for software development, which means more digital capabilities are now lying outside the core IT organisation,” said Rowsell-Jones. “Australian CIOs should harness this capability and provide the guardrails to support and facilitate business technologists in the wider organisation.”

Driven by the increased use of consulting services and infrastructure as a service (IaaS), IT services remains the largest IT spending category in Australia, forecast to reach over A$48.8bn in 2024. This is an increase of 8.2% from 2023, reflecting the increasingly important role IT service providers play in helping organisations in Australia navigate emerging digital opportunities and challenges.

“Interest in digital is undiminished, but Australian organisations have become more realistic in their attitudes to it,” said Rowsell-Jones. “Rather than trying to become the next digital giant, organisations are investing in digital enablement, either to improve cost and operational efficiencies, or to augment a traditional product set with digital capabilities so they can offer more services.”