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Consolidation drives down growth in datacentre spending

Cliff Saran

Analyst Gartner has cut its forecast for  datacentre systems spending growth in 2014 due to a reduction on spending on comms storage controllers.

In its Worldwide IT Spending report Gartner  has reduced predicted datacentre spending growth from 2.9% to 2.6%  due to a reduction in the forecast for

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external controller-based storage and enterprise communications applications.

These segments represent 32% total datacentre system end-user spending.

"There is a reduction in growth in datacentres because storage and communication are being squeezed," said Richard Gordon, managing vice president at Gartner.

Gordon added: "The trends of server virtualisation and hosted virtual desktop means there is now less of a driver to buy storage controllers." In terms of enterprise communications, he said spending was moving towards unified communications.

When asked about the impact of cloud computing on datacentre spending, Gordon said, "Cloud [computing] is leading to datacentre consolidation. But larger datacentres are being built by cloud providers, which leads to more efficient spending and less wasted processing power." Short term, Gartner expects datacentre spending to increase very little, but this will change due the adoption of technologies harnessing the internet of things.

Overall, worldwide IT spending is projected to total $3.8 trillion in 2014, a 3.1% increase from 2013 spending of $3.7 trillion.

Worldwide IT Spending Forecast (Billions of US Dollars)

 

2013

Spending

2014

Spending

2014

Growth (%)

Devices

     669

697

4.3

Data Centre Systems

     140

     143

2.6

Enterprise Software

     300

     320

6.8

IT Services

     922

     963

4.5

Telecom Services

  1,633

  1,653

1.2

Overall IT

  3,663

  3,777

3.1

Source: Gartner (January 2014)

The largest areas of growth, according to Gartner’s estimates, is in software, which is forecast to grow 6.8% in 2014 to $320bn. Gordon said: "In software, there is a big investment in analytics." This is being used to analyse social media data and data generated by apps. "Companies are looking to manage this information to improve customer facing activities like targeted marketing to the right customer at the right time and develop better loyalty programmes." He expected investments in analytics will also be used to drive greater efficiencies in the back office to make businesses more competitive.

The other area of interest in Gartner’s spending forecast is IT services, which is expected to grow 4.5% in 2014. Gordon said services are being cannibalised due to the move from on-premise applications to Saas. He said: "When companies used to buy on-premise software they used IT services." This extra spending is not usually necessary for Saas applications. He expects spending on IT services is being curbed by businesses being cautious on discretionary spending, particularly around projects.