Technology Spending Steadily Grows

Digital technology initiatives and changing workplaces are fueling spending increases.

In 2022, IT expenditures are projected to reach $4.5 trillion, an increase of 5.5% from 2021, according to the latest forecast by Gartner, Inc.  While overall spending is up, some segments are growing more aggressively than others.

Digital technology is a broad term encompassing a number of recent technical advances, such as cloud, mobile devices, the Internet of Things, and artificial intelligence and machine learning. Together, they provide executives with more information about company performance and reduce the friction evident in internal and external business processes. Because of the benefits, energy companies continue to invest in these solutions, which Gartner broke into five categories.

Technology’s High Growth Sectors   

Software is seeing the biggest boost in 2022 at 11.5%. The trend to cloud computing enables energy companies to spend more money on differentiating application software and less on system infrastructure. Consequently, energy companies are putting more time and money into software.

IT services had the second largest increase and represents the second largest technology sector of the five at $1,294 billion.  Technology has become more complex and more dispersed, so it becomes more challenging for energy companies to tie all of the needed components together. They turn to third party partners in order for help in that process.

Data center systems, mainly storage systems and servers, checked in as the third fastest growing segment at 5.8% growth. Applications are becoming more complicated, so enterprises need faster processors and more storage space to support the new or enhanced solutions.

Device and Network Increases are Meager

Devices has been an area of a major shift in the past few years. In 2020, the pandemic forced companies to shift workers from company offices to remote locations. As a result, corporate spending on laptops and desktops grew significantly. With those investments now made, growth is expected to be a modest 2.3% increase, resulting in $820,756 million next year.

Networking was the final category with a 2.1% spending rise. Ironically, networking is the largest segment of the IT buckets with $1,482,324 million in revenue. This technology is mature, so energy companies are able to purchase more bandwidth without paying a lot more money from year to year. Consequently, this segment’s growth has been tepid.

Utility reliance on technology continues to grow, so they are investing more in it. Software and services are the focal points now as interest wanes in areas, like devices and networking.