World leading research analyst Gartner forecasts that  Malaysia IT spend is expected to increase to MYR 68.9 billion in 2016, a 7.8 percent rise from last year. Comparatively, worldwide IT spending is forecast to total US$3.49 trillion in 2016, a decline of 0.5 percent over 2015 spending of $3.5 trillion. This is down from last quarter’s forecast of 0.5 percent growth. The change in the forecast is mainly due to currency fluctuations. 

Devices are seen to contribute spending in the country with close to RM13 billion while the bulk will comes from communication services coming at RM41 billion both have increased compared to 2015.

“There is an undercurrent of economic uncertainty that is driving organisations to tighten their belts, and IT spending is one of the casualties,” said John-David Lovelock, research vice president at Gartner. “At the same time, the need to invest in IT to support digital business is more urgent than ever.  To make that happen, leaders are engaging in tough cost optimisation efforts in some areas to fund digital business in others.” 

“As an example, the savings from legacy system optimisation and enhancements are being redirected to fund digital initiatives. It’s about doing more with the same funds,” said Mr. Lovelock. “Typically, less than 10 percent of organisations are in cost optimisation or cost cutting mode. However, the need to spend on digital business initiatives in a time when revenue growth does not support runaway IT budgets is forcing more organisations to optimize as a first step. Business processes, as well as IT, are undergoing optimisation — digital business requires both. However, many CIOs are reluctant to raise this possibility, given the cultural and political barriers to optimising business costs.” 

The most evident results of these optimisation efforts are in the switches in spending between assets and services. “Most traditional IT now has a ‘digital service twin’ — license software has cloud software, servers have Infrastructure as a Service, and cellular voice has VoLTE,” Mr. Lovelock said. “Things that once had to be purchased as an asset can now be delivered as a service. Most digital service twin offerings change the spending pattern from a large upfront payment to a smaller reoccurring monthly amount. This means that the same level of activity has a very different annual spend.”