IT spending in Australia and the Asia-Pacific region is set to hit $767 billion next year, ushering the era the 'digital industrial economy'.
Gartner senior vice-president and global head of research, Peter Sondergaard told an audience, at the Brisbane Gartner Symposium, that the digital world was here and that it was the beginning of a new era.
"This results in every budget being an IT budget; every company being a technology company; every business is becoming a digital leader; and every person is becoming a technology company," he said.
"This is resulting in the beginning of an era: the Digital Industrial Economy.
He said the Digital Industrial Economy would be built on the foundations of the nexus of forces (which includes a confluence and integration of Cloud, social collaboration, mobile and information) and the Internet of Everything by combining the physical world and the virtual.
“Digitalisation exposes every part of your business and its operations to these forces," he said.
"It is how you reach customers and constituents; how you run your physical plant; and how you generate revenue or deliver services.
"Enterprises doing this today are setting themselves apart and will collectively lead the new Digital Industrial Economy."
In Australia, IT spending is forecast to reach almost $77.2 billion in 2014, up 2.3 per cent from $75.5 billion in 2013.
The largest category of spending is IT services, forecast to reach $29.7 billion in 2014, followed by telecommunications services at $26.9 billion.
Spending on mobile devices is forecast to fall from more than $4 billion this year to $3.7 billion in 2014.
Software still represents the fastest growing category of IT spending in Australia, forecast to grow 7.8 per cent from almost $7.1 billion in 2013 to more than $7.6 billion in 2014.
Spending on information technology products and services in the Asia-Pacific region is forecast to grow 5.5 per cent next year to reach US$767 billion, up from $727 billion this year, and reach $933 billion in 2017.
In China, spending is forecast to grow 6.7 per cent in this year and accelerate to 8.7 per cent growth in 2014.
According to Gartner, China’s very powerful growing middle class is having a huge impact on the rest of the economy and IT, moving consumer and enterprise markets.
Automation of health, banking, government, communications and manufacturing are major IT drivers. These vertical industries will offer the greatest opportunities for technology vendors in the next 5 years.
In 2009, there were 2.5 billion connected devices with unique IP addresses to the Internet.
Most of these were devices people carry such as cell phones and PCs. In 2020, there will be up to 30 billion devices connected with unique IP addresses, most of which will be products.
Gartner predicts that the total economic value add for the Internet of Things will be $US1.9 trillion dollars in 2020.
Sondergaard said computing power would be cheap and covert in the new economy.
"We won’t know it is there; it will be in our jewelry and in our clothing,” he said
“We will throw more computers into our laundry in a week than we’ve used in our lifetimes so far.”
By 2017, new device categories: mobile phones, tablets, and ultra-mobile PCs will represent more than 80 per cent of device spending.
Gartner also forecasts that by 2017, nearly half of first-time computer purchases will be a tablet. Therefore, Sondergaard said mobile is the destination platform for all applications.
The new economy could also challenge traditional channel strategies.
Sondergaard said that what many traditional IT vendors sold a client in the past was often not what they needed for the digital future.
"Their channel strategy, sales force, partner ecosystem is challenged by different competitors, new buying centers, and changed customer business model,” he said. said.
“Digitalisation creates an accelerated technology-driven start up environment across the globe.
"Many of the vendors who are on top today, such as Cisco, Oracle, and Microsoft, may not be leaders in the Digital Industrial Economy.”