European organizations are expected to ramp up IT services spending in 2025 as CIOs focus their IT budgets on delivering tangible business benefits from generative AI.
IT spending as a whole across Europe is expected to hit $1.28 trillion in 2025 — a 'remarkable' 8.7% increase, according to Gartner, and the highest growth rate in IT spending in a single year in Europe since the post-pandemic surge in 2021.
"In 2024, the surge of building out AI-related infrastructure by technology providers is driving high levels of spending on data center systems in Europe," said John-David Lovelock, distinguished VP analyst at Gartner
"CIOs in Europe will continue investing in public cloud end-user spending, which is estimated to reach $123 billion in 2024, and grow their security spending, projected to reach $47 billion in 2024."
Outstripping that is the surge in IT services spending related to AI, which Gartner expects to grow by 21% to reach $94 billion in 2025.
Organizations in Europe, the consultancy said, will increasingly shift from buying generative AI solutions to implementing partner solutions during 2025.
“The limited success of many pilots and proofs of concept (POCs) in 2024 will push European organizations to shift from building their own GenAI solutions to buying and implementing partner solutions in 2025,” said Lovelock.
Expect a data center spending boom
Data center spending is growing at a rapid rate, according to Gartner. The consultancy recorded a 25% increase this year, largely due to increased demand for AI-optimized servers.
While this is likely to slow in the year ahead, Gartner expects spending in this domain to still increase by around 11% across 2025.
"Europe has seen a remarkable 46% increase in server spending by technology providers in 2024. In 2025, technology companies will continue building out the infrastructure needed for training GenAI models today and inferencing them in the future."
Global spending boom pending
Globally, Gartner revealed IT spending is expected to reach $5.74 trillion in 2025, marking a 9.3% from this year. Again, it's generative AI that's behind the overall boom.
Most spending on generative AI so far has come from technology companies building the supply-side infrastructure for the technology, Lovelock said, but CIOs will begin to spend on generative AI beyond proof-of-concept work next year.
Lovelock urged IT leaders to temper expectations, however.
"More money will be spent, but the expectations that CIOs have for the capabilities of GenAI will drop,” he said. “The reality of what can be accomplished with current GenAI models, and the state of CIO’s data, will not meet today’s lofty expectations."
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