If your clients include larger corporations, and you’re serving only their IT departments, you may want to rethink that.
That's because non-IT line of business (LoB) managers increasingly buy a lot of technology.
How much? Well, market watcher IDC now predicts that LoB purchases of corporate IT products and services worldwide this year will hit $609 billion, up 6% from last year.
And it only gets even bigger. IDC also predicts that total LoB spending on IT worldwide will be nearly equal to that spent by IT groups by 2020. That’s just 3 years ahead.
LoB spending on IT will get there by growing from 2015 to 2020 at a compound annual growth rate (CAGR) of nearly 6%, IDC predicts. During those same 5 years, IT spending by IT departments will grow much slower, with a CAGR of just 2.3%.
By industry, LoB spending on IT already exceeds that of IT groups in 5 verticals, according to IDC: discrete manufacturing; healthcare; media; personal and consumer services; and securities and investment services.
And by 2020, these 5 industries are forecast to be joined by 4 more: insurance, process manufacturing, professional services, and retail. If that proves correct, it will mean that in 9 major industries, non-IT managers are spending more on IT than their IT departments do.
The trend is especially pronounced here in the United States. IDC believes that this year, U.S. LoBs will fund 62% of all corporate IT purchases. In other words, for every dollar spent on corporate IT, 62 cents will come from outside IT.
What’s driving this shift? IDC points to some usual suspects, including “shadow IT,” artificial intelligence, 3-D printing and the Internet of Things.
And don’t forget the cloud. Amazon’s AWS and other public-cloud services let LoB managers fire up compute capacity with little more than a credit card.
Eileen Smith, an IDC program manager, says cloud is “enabling U.S. lines of business to rely less on enterprise IT than any other country fund their technology purchases.” If you’ve already heard CIOs and other IT managers complaining about shadow IT, this will come as no surprise.
To be sure, IT departments will still dominate spending for certain technologies. Servers, for example. IDC predicts that this year, worldwide spending on servers by IT groups will total $114.1 billion. At the same time, spending by non-IT groups on servers will total just $52.9 billion, or about half of what IT will spend.
But in other areas, IDC believes LoB spending this year will exceed that of IT. One such area is a bundle of PCs, smartphones, monitors, printers and tablets. Put it all together, and LoB spending this year will come to $83.8 billion, IDC predicts. IT spending on the same gear will come in at just $76.2 billion, or nearly $8 billion less.
It’s even more dramatic for software applications. Here, IDC predicts that LoB spending this year will total $150.7 billion. IT spending on the same software will come to $64.7 billion, IDC says, which is less than half of what it believes LoB units will spend.
Put it all together, and the message is clear: Expand your potential clients to include not only IT managers, but also those in non-IT lines of business. Those LoB managers could be IT’s newest big spenders.
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