Middle East IT spending in marginal 2016 growth: Gartner

Analysts examine how CIOs can lead in digital business during Gartner Symposium/ITxpo 2016

Tags: Gartner Inc. (www.gartner.com/technology/home.jsp)United Arab Emirates
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Middle East IT spending in marginal 2016 growth: Gartner Sondergaard: The algorithmic economy will power the next great leap in machine-to-machine evolution in the Internet of Things.
By  David Ndichu Published  March 1, 2016

Middle East (ME) IT spending is projected to reach $212.9 billion in 2016 a 3.7 percent increase from 2015, according to the latest forecast by Gartner.

The IT industry is being driven by digital business, and an environment driven by a connected world.

Peter Sondergaard, senior vice president and global head of research at Gartner, provided the latest outlook for the IT industry today to an audience of more than 600 CIOs and IT leaders at Gartner Symposium/ITxpo, which is taking place here through March 3, that interconnections, relationships, and algorithms are defining the future of business.

“We see positive IT growth and scenarios in the Middle East despite some level of economic uncertainty in world markets,” said Sondergaard. “The substantial industrial refocusing to generate new economic development beyond the oil industry, with deepening smart cities initiatives and adoption of the Internet of Things (IoT), is of utmost importance in this region. We are witnessing priorities for smart city governments in education, transportation, safety and health.”

With devices representing close to 19 percent of total IT ME spending, tablets and PCs are showing good momentum in the forecast period. Tablets and PC sales are forecast to reach nearly $8 billion in 2016, and surpass $10 billion in 2018. Mobile phone sales will grow from slightly above $30 billion in 2016 to nearly $37 billion in 2019.

With IT services doubling software expenditures in 2016, business IT services will represent 84 percent of the total services segment; while in software, enterprise application software will present the largest growth rate in the forecast period. However, in actual spending dollars infrastructure software will lead.

The data centre segment market is forecast for relatively flat growth in 2016. This segment includes external network equipment, external controller-based storage, servers, and unified communications.

In five years, 1 million new devices worldwide will come online every hour. These interconnections are creating billions of new relationships. These relationships are not driven solely by data, but algorithms.

“Data is inherently dumb. It doesn’t actually do anything unless you know how to use it; how to act with it,” Mr. Sondergaard said. “Algorithms are where the real value lies. Algorithms define action. Dynamic algorithms are the core of new customer interactions.”

Sondergaard cites examples such as Amazon’s recommendation algorithm that keeps customers engaged and buying; Netflix’s dynamic algorithm – built through crowdsourcing – keeps people watching; and the Waze algorithm that directs thousands of independent cars on the road.

“The algorithmic economy will power the next great leap in machine-to-machine evolution in the Internet of Things,” Sondergaard said. “Products and services will be defined by the sophistication of their algorithms and services. Organisations will be valued, not just on their big data, but the algorithms that turn that data into actions, and ultimately impact customers.”

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