The Tale of Two Technology Groups and one Recession
Change upsets the status quo as new conditions benefit some companies more than others. Change that accelerates nascent trends creates disruption.?The current economic turbulence and the potential for a recession is just such a change.
Technology Spend is expected to increase, even in the face of a recession
Gartner’s 2Q22 forecast indicates that technology spending, including consumer and corporate spending, is expected to grow 5.9% in constant currencies for 2022 and 6.3% for 2023[1]. The figure below highlights the Gartner IT Market Databook[2] spending forecast showing 2022 growth rates on the horizontal and the CAGR growth rates from 2020 to 2026 on the vertical.?The size of each bubble indicates the 2022 forecast market size.
2022 to 2026: The tale of two technology markets
Economic turbulence and a potential recession will accelerate the gap between digital and pre-digital technologies. The chart above highlights the markets forecast with above average and below average growth. A quick look at the numbers below illustrates the gap.
Digital intensive market categories are expected to grow 13% in 2022 compared with their pre-digital category growth of 1.%.?Over the next four years, to 2026, that gap remains with a digital CAGR of 11.6% compared to pre-digital’s 3.3%.
These are averages for each group.?Individual market group or company performance will be based on its own situation. These figures support the idea of the market separating along digital lines with significantly different outlooks for each group.
Companies will cut IT spend before they cut Technology Spend
The observation that digital related technology solutions would displace their pre-digital counterparts is nothing new.?The pandemic accelerated this shift, but the recent forecast data and the economy further cements the shift and the fortunes of these two technology markets.
Companies can be expected to cut their spending in the face of a potential recession.?They are more likely to cut spending in pre-digital categories, those that are more closely related to IT. The spending cut is the headline.?But the news beneath the headline is that organizations are expected to continue or even accelerate their investments in digital categories, or those areas related to applying technology to business.?
Predominately pre-digital markets are large, representing a forecast $2.7 trillion dollars for 2022, they are no longer the primary source of growth.?Digital related markets, $1.8 trillion dollars in 2022 are not only catching up but they are providing the growth opportunities for technology and service providers.?
领英推荐
While the headline focuses on the potential impact of a recession, the details tell a more compelling story. Not only is the market for technology spending changing, but the nature of that market is changing faster in the face of a potential recession. This is an example of a silent disruption[3],
Related Posts:
[1] These percentages include both consumer and corporate spending to provide an overview of the market
[2] Gartner Press Release. Market Data Book access requires a Gartner Subscription
[3] General Manager Insight: Recognizing the Silent Signs of Emerging Disruption, requires a Gartner Subscription