Australian IT spending to reach $133b in 2024: Gartner

Australian IT spending is projected to reach $133 billion in 2024, a 7.8 per cent increase from 2023, according to research from Gartner.

Most of the growth will be buoyed by increases in software and IT services spending, which are projected to grow 12.8 per cent and 8.2 per cent, respectively.

“This projected IT spending growth in Australia, in the context of an anticipated inflation rate decline to around 3.25 per cent by the end of 2024, suggests that more money will be available to IT departments,” Gartner distinguished vice president analyst Andy Rowsell-Jones said.

“Despite this, most Australian CIOs are focused on optimising infrastructure and operational costs and efficiencies, by further investing in cloud and digital enablement to deliver higher business outcomes and revenue.”

Gartner said Australian chief information officers are expected to direct the largest amount of new or additional funding in 2024 towards cybersecurity, cloud platforms, data and analytics and application modernisation.

“Given the highly publicised data breaches we’ve seen in Australia over the past 12 months, it’s no surprise that cybersecurity is at the top of the spending list again," Roswell-Jones added.

“Every organisation’s risk and audit committee is worrying about a potential cybersecurity fallout and various industry regulators are actively pushing for improved capabilities.”

In its 2023 CIO and Technology Executive Survey, Gartner found that some 62 per cent of Australian CIOs expected to increase investments in cloud this year, while reducing IT spending in their own data centres.

This was reflected by slower growth in data centre systems spending in 2023, experiencing a 6.4 per cent decline, but Gartner forecasts this will rebound to 5.1 per cent growth in 2024.

“This turnaround in spending on data centre systems next year in Australia will primarily be driven by increased investments in secure access service edge (SASE) technologies," Rowsell-Jones said.

“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.”

IT services remains the largest spending segment due to the increased use of consulting services and infrastructure as a service (IaaS), which is forecast to grow 8.2 per cent to $48.8 billion in 2024.

“Interest in digital is undiminished, but Australian organisations have become more realistic in their attitudes to it," Rowsell-Jones added.

“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.”

Gartner said the continued shift to digital in Australia will drive increasing investment in generative AI technologies in 2024, particularly tools for software development and code generation.

The spending on the tech however will primarily be incorporated 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," Rowsell-Jones said.

“Australian CIOs should harness this capability and provide the guardrails to support and facilitate business technologists in the wider organisation.”