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CEO Demand for Worker Productivity to Drive Small Increase in Tech Spending

Demand for Worker Productivity requires getting the right skill at the right place at the right time without owning  the worker….

Spending on technology is expected to rise a scant 0.6% in 2016, according to Gartner Inc., led by increases in outlays for software, data center equipment and IT services. The picture looks better than last year’s decline of 5.8% in technology spending worldwide as companies this year look to “optimize labor costs,” said Peter Sondergaard, senior vice president of research at Gartner.

“CEOs are looking for the productivity gain,” said Mr. Sondergaard, speaking at The Wall Street Journal CIO Network conference in Half Moon Bay, Calif., Tuesday. Areas targeted included human tasks that can be replaced or augmented by technology, such as in customer services, he said.

Software is expected to see the biggest gains, with spending to rise 5.3% in 2016 to $326 billion worldwide, according to Gartner’s latest forecast, in January. IT services is due to increase 3.1% to $940 billion and data center technology is due to increase 3.0% to $175 billion, Gartner predicts.

A continued march to cloud computing – including setting up hybrid and private clouds – is pushing data center spending, Mr. Sondergaard said.

Sectors projected to decline this year are communications and devices, by 1.2% and 1.9%, respectively (see chart).

Overall, the 5.8% drop in IT spending in 2015 that “hammered” technology vendors was mainly due to currency fluctuations, he said. If exchange rates remain steady, this year will see a slight rise. “If we have a drop in currency or oil goes to $10 a barrel, it’s a different scenario. That will impact budgets.”

By Kim S. Nash – Wall Street Journal CIO Network

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