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2020 IT Spending Forecasts Still Showing Strong Growth In Enterprise

2020 IT spending forecastsIt is January here is business software land which means that the 2020 IT spending forecasts are coming out. They are always exciting to read and dig into. A core part of the Bowery Capital thesis revolves around business software replacement cycles. An easy example in our portfolio is a company like VNDLY that seeks to replace VMS vendors like SAP Fieldglass and Beeline. These are 10-20 year old companies that we consider legacy. The founding team is gone, they have a languishing product, and the digital native CIO demands more. Back to the data, we go so far as to quantify the change happening in these companies at roughly $400-$500B over a 10 year period from old to new. We also talk about overall U.S. IT spending, where this is shifting in a more macro sense, and again go so far as to quantify it at around $1.5-$2.0T in spend annually in the U.S. Where do we get this data from and how do we quantify it? Prior to our formation we had a little fun with reports and found that Gartner and Forrester have the most logical, explainable, and directionally accurate reports out there. The two that matter the most to us and we track are below.

The Gartner Market Databook – Released quarterly, this is Gartner’s IT spending forecast on a global basis. While we mostly spend time in the US segments of the data, the methodology relies heavily on rigorous analysis of sales by thousands of vendors across the entire range of IT products and services. Gartner uses primary research techniques, complemented by secondary research sources, to build a comprehensive database of market size data on which to base its forecast. It’s a pretty in depth read if you care to understand where spend is shifting.

The Forrester Global Tech Market Outlook – Released annually, this is Forrester’s projections for baseline growth in the global tech market by region and country, by product, and by other dimensions like spending on new projects or on business technology.  The 2020 edition has not come out yet and usually is released in February. Similar to Gartner, they use primary research techniques and then talk to a lot of CIOs, CTOs, and other buyers through secondary research sources, to build a comprehensive database of market size data on which to base its forecast.

Both of these reports get pretty close at predicting the macro numbers globally and in the U.S. In addition, they do a great job covering some of the very specific areas investors care about (SaaS, IaaS, PaaS, etc). What do the 2020 IT spending forecasts tell us? For the most part, the data continues to show these markets are growing way faster than anyone thoughts. Gartner predicted about $431B in what they call “Enterprise Software” spend in 2019 and the number came in at $456B. In addition, they are raising their growth rate above 10% for the first time in a long time. All in, we are encouraged by the numbers and excited for the next generation of b2b market leaders.

If you liked “2020 IT Spending Forecasts Still Showing Strong Growth In Enterprise” and want to read more content from the Bowery Capital Team, check out other relevant posts from the Bowery Capital Blog.

Michael Brown
Michael Brown
Michael is a Founder & Managing Partner at Bowery Capital based in New York. Prior to Bowery Capital, Brown was a Co-Founder and General Partner at AOL Ventures. Before AOL Ventures, Brown worked for the investment arm of Richard Branson’s Virgin Group. He began his career at Morgan Stanley as an equity research analyst. Outside of his professional life, Brown serves on the Board of Directors of the National Forest Foundation and the Columbia College Alumni Association. He holds a B.A. from Columbia University.