ICT spending stable in Aus, NZ despite pandemic

ICT spending in Australia and New Zealand (A/NZ) experienced stable growth in 2020, despite the turbulence of the COVID-19 pandemic. Government stimulus initiatives and A/NZ businesses’ prior investments in digital transformation played a key role in mitigating the worst impact of the pandemic on business investment activity. While growth rates were modest, some areas of spending grew in tandem with rapid migrations to new business models, hybrid workplaces and online learning. Despite the pandemic continuing through 2021, recent IDC surveys have indicated that most A/NZ businesses are continuing to invest in technology, with IT spending levels to be higher in 2021. The IDC has also forecast that A/NZ spending will grow by over 2.1% to reach US$93 billion by 2025, with a compounded annual growth rate of 2.5% forecast to 2025.

The IDC 2020 A/NZ IT Services Ecosystem survey revealed that 69% of A/NZ organisations believe the pandemic has accelerated their digital transformation programs, with many agreeing that this investment played a major role in creating digital resilience. IDC’s 2021 Future Enterprise Resiliency surveys revealed that more than 80% of A/NZ organisations were either entering the ‘Return to growth and Transformation stage’ by early 2021, indicating willingness to invest aggressively, or in ‘The Next Normal stage’ by early 2021, where businesses had stabilised. This is the highest rate measured across the Asia–Pacific region, with only China showing higher levels of positive sentiment.

Mario Allen Clement, Senior Market Analyst for IDC IT Spending Guides, Customer Insights & Analysis, said Australia and New Zealand were early entrants to the digital transformation journey, which allowed them to pivot their operations as the pandemic hit. “Digitalisation enables organisations to continue to engage with partners and customers, deliver products and services, and keep innovating, allowing the economy to sustain growth despite the pandemic,” Clement said.

The banking and government industry contributed the highest (30%) of the overall ICT spend in 2021, excluding the consumer segment, and it is expected to be one of the highest areas of growth in 2021, with a 2.8% growth forecast year over year. ANZ banks continue to invest in digital transformation programs to drive customer engagement and enable more effective innovations in products and services. The continual adoption of cloud-based infrastructure and the modernisation of application platforms will be two focus areas in the coming year. Governments across the region have continued to increase tech budgets to enhance crisis response capability, improve operational efficiency and provide effective services to citizens.

The large and very large business segment (over 500 employees) will gain a share to account for over 49% of spending by 2025, with a five-year CAGR of 3.7%. This segment is accelerating investment in digital capabilities to drive business results, create digital resiliency and gain competitive advantage through emerging technology. Improving customer experience and operational efficiency are two universal areas of focus among all Australian and New Zealand businesses in 2021.

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