2. WEBINAR The 2016 To 2017 Global Tech Market Outlook
Andrew Bartels, Vice President, Principal Analyst
January 6, Call in at 10:55 a.m. Eastern time

4. Agenda: Five themes for this webinar
Moderate growth in tech spending: No boom, but no bust
Smooth sailing for the US tech market, and choppy waters elsewhere
BT priorities will be growth engines for tech spending, especially in growing markets.
Cloud and analytics will make software and services the fastest-growing tech categories.
More reasons for optimism than for pessimism

5. Theme 1 for global tech market outlook
Moderate growth in tech spending: No boom, but no bust

6. How our global forecasts have evolved
WE HAVE LOWERED OUR 2016 TECH MARKET OUTLOOK DUE TO ECONOMIC WEAKNESS IN ASIA PACIFIC, LATIN AMERICA, AND EUROPE
Forrester’s forecasts for global tech market growth in constant currencies
Forrester’s forecasts for total tech market growth in US dollars
*Forrester forecast
†January 2016 forecasts include telecommunications services; prior forecasts did not

7. Global tech market by product in US$, 2011 to 2017
4.9%
1.5%
1.6%
2.8%
-3.8
3.8%
$3,088
$2,950
$2,870
$2,943
$2,783
$2,825
$2,826
US$ billions
*Forrester forecast

8. Growth rates in global tech market by product
SOFTWARE AND CONSULTING SERVICES LEAD THE MARKET
Global in US$ (% change)
2012
2013
2014
2015*
2016*
2017*
Computer equipment
0.9%
1.5%
1.0%
-7.6%
2.4%
5.3%
Communications equipment
1.6%
0.6%
2.0%
-5.7%
0.7%
Software
2.9%
3.9%
-2.5%
5.7%
7.4%
Tech consulting and systems integration services
0.2%
3.4%
5.1%
-3.4%
5.5%
Tech outsourcing and hardware maintenance
2.7%
3.2%
2.3%
3.5%
4.6%
Telecommunications services
0.8%
-0.3%
1.7%
3.6%
Total tech purchases
2.8%
-3.8%
3.8%
4.9%
*Forrester forecast

9. 2011 to 2017 global IT purchases forecast
Yen and euro weakness will continue to distort US-dollar tech market growth until 2017
2011 to 2017 global IT purchases forecast
(Percentage change in US dollars and in exchange-rate-adjusted US dollars)
*Forrester forecast

10. Growth rates in global tech market by product in constant currency
IN CONSTANT CURRENCY TERMS, STEADY 5% TO 6% GROWTH IN SOFTWARE
Global in exchange-rate-adjusted US$ (% change)
2012
2013
2014
2015*
2016*
2017*
Computer equipment
1.2%
4.0%
3.0%
2.9%
0.1%
3.2%
Communications equipment
3.6%
4.7%
2.0%
3.9%
2.1%
1.5%
Software
6.0%
5.8%
5.6%
6.5%
Tech consulting and systems integration services
6.2%
4.9%
7.0%
5.9%
Tech outsourcing and hardware maintenance
5.3%
4.1%
4.3%
Telecommunications servicess
3.4%
1.1%
3.5%
Total tech purchases
4.4%
4.6%
4.2%
4.5%
*Forrester forecast

11. Theme 2 for global tech market outlook
Smooth sailing for the US tech market, and choppy waters elsewhere

12. In local currencies, US will have strongest growth in 2016
2011 to 2017 regional tech purchases forecast
(Percentage change in exchange-rate-adjusted US dollars)
*Forrester forecast

13. 2016 tech market by 25 largest tech markets by country

14. India and China will have the fastest economic growth; Russia and Brazil in recessions

15. Most currencies will continue to weaken against the US dollar in 2016
100 = Q exchange rate against the dollar
*Forrester forecast, as of December 28, 2015
Source: Forrester Research, based on quarterly average exchange rates from Oanda

16. Absence of Federal budget shocks means smoother growth path for US economy in 2016
US real GDP and GDP deflator
(Percentage change from prior quarter at annualized rate)
Fears of “fiscal cliff” not resolved until January 2013
Federal government shutdown, October 2013
Federal debt-ceiling crisis of July 2011
Source: US Bureau of Economic Analysis, “Gross Domestic Product: Third Quarter 2015 (Second Estimate); Corporate Profits: Third Quarter 2015,” November 24, 2015 (
*Forrester assumptions

17. US tech purchases will rise by 4.8% in 2016 after a 4.5% gain in 2015
3.6%
$1,425
5.6%
$1,360
$1,302
$1,243
$1,200
$1,136
US$ billions
Source: US Department of Commerce for 2011 to 2014 for computers and peripherals, communications equipment, and software; US Census Bureau for tech consulting services and tech outsourcing for 2011 to 2014; US Bureau of Labor Statistics for CIO staff spending; and Forrester Research for these items in 2015 to 2016
*Forrester forecast

18. Tech categories ranked by highest yearly growth rate in the US
US growth shifted from outsourcing services in 2004 to 2013 to software and consulting from 2014 to 2016
Tech categories ranked by highest yearly growth rate in the US
(Percentage change from prior year in US dollars)
Tech category 
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015*
2016*
Computers and peripheral equipment
-4% 8% 1%
-10% 4%
-9% 3%
-3%
-2%
Communications equipment 2%
11%
-17% 0% 6%
-1%
Software 7% 9% 5%
Tech consulting services
10%
Tech outsourcing
15%
19%
Telecom services
-14%
-6%
CIO staff salaries and benefits
Total US tech
3.4%
4.0%
8.1%
4.5%
-3.7%
6.1%
5.0%
5.6%
Source: US Department of Commerce for 2011 to 2014 for computers and peripherals, communications equipment, and software; US Census Bureau for tech consulting services and tech outsourcing for 2011 to 2014; US Bureau of Labor Statistics for CIO staff spending; and Forrester Research for these items in 2015 to 2016
Highest
Second highest
Third highest
Middle
Third lowest
Second lowest
Lowest
*Forrester forecast

19. Theme 3 for global tech market outlook
BT priorities will be growth engines for tech spending, especially in growing markets.

20. How Forrester looks at tech spending
New project spending (25% to 30%) creates new capabilities.
Tech MOOSE is the 70% to 75% of tech budget to maintain and operate organization, systems, and equipment.
Forrester terms:
Business technology (BT) is technology for firms to win, serve, and retain customers.
Information technology (IT) is technology to support business operations and to cut costs. BT
new project
BT MOOSE
IT MOOSE
IT new project

21. Business technology: top technologies in the BT agenda include customer life-cycle solutions and the engagement platform
Source: “Top Technologies For Your BT Agenda” Forrester report

22. Business technology will be 26% of global tech purchases in 2016
4.9%
2.8%
-3.8%
3.8%
1.5%
1.6%
$3,088
$2,950
$2,870
$2,943
$2,783
$2,825
$2,826
US$ billions
Source: Forrester Research, Inc.
*Forrester forecast
*Forrester forecast

23. Global tech spending by focus (US$ billions)
But business technology will be a larger share of new tech purchases in 2016
Global tech spending by focus (US$ billions)
$2,943
$2,249
$694
*Forrester forecast

24. And spending on business technology will grow faster than spending on IT
Global tech purchases by business focus (Percentage change from prior year)
*Forrester forecast

25. New project spending will outpace tech MOOSE in 2016 and 2017
Total MOOSE spending on goods and services purchases
7.5%
1.7%
1.8%
2.3%
-4.0%
3.5%
4.4%
Total new project spending
9.9%
0.9%
1.1%
4.2%
-3.3%
4.6%
6.8%
Total tech purchases
8.0%
1.5%
1.6%
2.8%
-3.8%
3.8%
4.9%
*Forrester forecast

26. BT tech MOOSE will grow much more rapidly than IT MOOSE

27. Theme 4 for global tech market outlook
Cloud and analytics will make software and services the fastest-growing tech categories.

28. Global software market, 2011 to 2017
Global software by major product (US$ billions)
$640
$597
$579
$549
$557
$565
$534
*Forrester forecast

29. In software, growth will be greatest in analytics, process apps and mobile apps
Growth from prior year
2013
2014
2015*
2016*
2017*
Operating systems
1.4%
2.9%
-7%
-4% 3%
Storage management
-3%
-5% 1% 2%
Database management systems 6% 4%
IT management tools
Security 7% 5%
11%
App servers and integration
-1% 8%
Application development tools
-6%
Desktop applications
Information management applications 9%
Enterprise process applications
10%
12%
Enterprise vertical applications
Mobile applications built by contractors and consultants
140%
67%
35%
30%
29%
Other custom applications built by contractors and consultants
-13%
-15%
Middleware
Applications
Custom applications
*Forrester forecast

30. Global business applications by type of product (US$ billions)
In business apps, BI, CRM, FMS, HRMS, and vertical apps are biggest categories
Global business applications by type of product (US$ billions)
$172
$158
$141
$136
$124
$115
$107
*Forrester forecast

31. Global business applications by type of revenue (US$ billions)
In business apps, SaaS subscription revenues close in on combined license and maintenance by 2017
$172
Global business applications by type of revenue (US$ billions)
$158
$141
$136
$124
$115
$107
*Forrester forecast

32. Global tech consulting and SI market, 2011 to 2017 — SI work is bigger, but consulting is growing faster
Global tech consulting and systems integration services market (US$ billions)
5.5%
5.1%
3.5%
5.1%
-3.4%
0.2%
$571
$541
$533
$507
$515
$489
$490 8% 8% 4% 4%
*Forrester forecast

33. Global tech outsourcing services market (US$ billions)
Global tech outsourcing market, 2011 to 2017 — IaaS only segment with good growth
Global tech outsourcing services market (US$ billions)
3.4%
2.5%
2.8%
1.7%
-4.3%
2.4%
$471
$456
$457
$465
$445
$445
$435 1%
-1% 4% 3%
42%
40%
*Forrester forecast

34. Computer equipment market, 2011 to 2017 — PCs and tablets are growing
Global computer equipment market by major product (US$ billions)
1.5%
5.3%
1.0%
0.9%
-7.6%
2.4%
$384
$381
$385
$372
$375
$364
$356
*Forrester forecast

35. Communications equipment market, 2011 to 2017 — not much growth
Global communications equipment market by major product (US$ billions)
0.6%
2.0%
1.6%
-5.7%
0.7%
2.4%
$354
$361
$346
$352
$351
$341
$343
*Forrester forecast

36. US telecommunications services market by major service (US$ billions)
US telecom services market, 2010 to 2015 — 2014 bump up after and before slow growth
US telecommunications services market by major service (US$ billions)
4.5%
10.7%
-1.8%
5.0%
$211
$202
5.4%
$186
$182
$177
$168
*Forrester forecast

37. Theme 5 for global tech market outlook
More reasons for optimism than for pessimism about tech market outlook

38. Three reasons the tech market could do better than our forecast
Europe’s and Japan’s economic growth improves
China’s economy returns to strong growth
Microsoft 10 takes off, giving a boost to the PC and desktop application market.
Also, no threats to US economy
from US Congress in 2016,
though 2017 will bring worries.

39. Two reasons the tech market could do worse than our forecast
Europe slips back into recession, and China’s growth slips to under 5%.
US economic policies turn contractionary if the Federal Reserve’s monetary tightening overshoots
Also, Fed tightening while other central banks loosen would cause US dollar to rise even higher, causing dollar-denominated tech market to drop even if local currency growth is positive

40. Recommendations for CIOs
Adapt your plans to the outlook for your country’s tech market.
In most countries, prospects for steady, moderate growth in 2016 will allow CIOs to increase their tech spending.
CIOs should prioritize investments that support the BT agenda.
Cloud computing and mobility create opportunities to change the economics and agility of tech management.
Technologies of analytics, big data, and smart process apps create opportunities for CIOs’ organizations to help transform the business.
Weak demand for IT agenda creates opportunities to save.
Because of a weak demand for PCs, servers, network gear, middleware software, mature apps, and outsourcing, now will be a good time to negotiate big savings in new or existing systems.
Focus on driving down tech MOOSE costs to create room for new BT MOOSE.

41. Andrew Bartels