Worldwide IT spending is forecast to grow from $US2.46 trillion in 2015 to more than $US2.8 trillion in 2019, with IT vendors urged to target pockets of growth amidst a “volatile economy.”
“With the global economy entering a new and uncertain phase, IT spending will be heavily influenced by economic cycles and wild cards over the next five years,” says Stephen Minton, Vice President, Customer Insights and Analysis, IDC.
“Recent sluggishness in China has caused severe disruption for emerging markets, while the collapse in oil prices continues to challenge energy producers and stock market volatility poses new questions for investment firms.
“In many industries, business leaders will turn to IT solutions, including data analytics and infrastructure optimisation, to help them navigate the stormy economic waters.
“For IT vendors, the need is greater than ever for a detailed approach to targeting pockets of growth and opportunity amidst this volatile economy.”
From an industry perspective, Minton says the largest IT expenditures will be found in the discrete manufacturing, banking, and telecommunications verticals with each delivering more than eight percent of all spending throughout the forecast period.
Minton says these three industries will be followed by process manufacturing, federal/central government, and professional services.
The fastest growing vertical industry over the 2015-2019 forecast period will be healthcare, with a five-year CAGR of 5.5 per cent.
Banking and insurance are tied with media and the resource industries for the industries with the second fastest-growing IT spending, each with a five-year CAGR of 4.6 per cent.
In terms of company size, over 40 per cent of overall IT spending will come from very large businesses (more than 1,000 employees) while the small office category (the 70-plus million small businesses with 1-9 employees) will provide roughly one quarter of all IT spending throughout the forecast period.
Medium (100-499 employees) and large (500-999 employees) business will see the fastest growth in IT spending, with CAGRs of 4.4 per cent and 4.8 per cent, respectively.
“Organisations from all industries and of varied sizes are investing in a combination of customer-facing initiatives, enterprise-focused projects, and 3rd Platform technology adoption and advancement,” adds Jessica Goepfert, Program Director, Customer Insights and Analysis, IDC.
“To truly capitalise on this opportunity, vendors would be well served to not only listen to their strategic client's feedback but also to respond and react accordingly.
“Knowing the client's industry is table stakes. In order to become more embedded in their customers' businesses and make a significant impact, the conversations between vendor and client must change to be process and outcome focused.”
Software spending will be the fastest growing technology market segment with a 6.7 per cent CAGR, led by healthcare and financial services investments, followed by business services at 6.2 per cent with strong spending growth from media and resource industries.
In contrast, hardware and IT services spending will grow at rates slower than the overall market.
Within the software segment, applications that facilitate enterprise and IT operations, such as enterprise resource management and operations & manufacturing applications, will receive the greatest share of software spending.
The fastest growing software categories will be network software, collaborative applications, and data access, analytics & delivery applications.
Hardware will remain the largest market segment overall with roughly 40 per cent of all IT expenditures going to devices, infrastructure, and telecom hardware throughout the forecast period.
Telecom hardware including smartphones will represent more than half of all hardware spending through the forecast while PCs will remain an important category of IT spending despite a five-year CAGR of -1.6 per cent.
Spending on enterprise infrastructure will be driven by solid growth in the server and storage segments with CAGRs of 2.6 pe rcent and 3.2 per cent, respectively - IDC claims that healthcare and telecommunication firms will represent the strongest opportunities here.