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​Vertically challenged? Channel chases IT dollar as 3rd Platform potential plays out

​Vertically challenged? Channel chases IT dollar as 3rd Platform potential plays out

Positive momentum displayed in large industries as companies continue to invest in 3rd Platform solutions.

Worldwide revenues for information technology products and services will grow from nearly $US2.4 trillion in 2016 to more than $US2.7 trillion in 2020, led by financial services, manufacturing and healthcare.

Representing a compound annual growth rate (CAGR) of 3.3 per cent for the 2015-2020 forecast period, IDC findings report “positive momentum” displayed in large industries such as financial services and manufacturing, where companies continue to invest in 3rd Platform solutions (e.g. cloud, mobility, and Big Data) as part of their digital transformation efforts.

Despite the expected spending flurry, the telecommunications industry is forecast to remain relatively sluggish, although spending levels are expected to gradually improve compared to the past several years.

Combined, these four industries (banking, discrete manufacturing, process manufacturing, and telecommunications, which are also the industries with the largest IT expenditures) will generate nearly a third of worldwide IT revenues throughout the forecast.

Meanwhile, findings report that consumer purchases accounted for nearly a quarter of all IT revenues in 2015, thanks to the ongoing smartphone explosion.

But consumer spending for PCs, tablets, and smartphones has been weakening, which will have a dampening effect on the IT market overall.

Looking ahead, even the moderate growth forecast for the tablet market will be driven by commercial segments rather than consumer tablet sales.

“While the consumer and public sectors have dragged on overall IT spending so far in 2016, we see stronger momentum in other key industries including financial services and manufacturing,” IDC vice president of analysis, Stephen Minton, said.

“Enterprise investment in new project-based initiatives, including data analytics and collaborative applications, remains strong and mid-sized companies have been especially nimble when it comes to rapidly adopting 3rd Platform technologies and solutions.

“Assuming the economy remains stable in 2017, smaller businesses will also begin to climb aboard the 3rd Platform in greater numbers.”

Verticals

Minton said healthcare will remain the fastest growing industry with a five-year CAGR of 5.7 per cent despite concerns that spending growth may have peaked.

Furthermore, banking, media, and professional services will also experience solid growth with CAGRs of 4.9 per cent and combined revenues of more than $US475 billion in 2020.

Elsewhere, gradual improvement is expected in the public sector, although government purchases of technology will continue to lag behind much of the private sector.

Similarly, IT expenditures in the natural resources industry are forecast to recover as the price of oil rebounds from recent lows.

Size

In terms of company size, more than 45 per cent of all IT spending worldwide 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.

Minton said medium (100-499 employees) and large (500-999 employees) business will see the fastest growth in IT spending, each with a CAGR of 4.4 per cent.

“The small business market has been challenged by the economic slowdown in some regions but there is now some pent-up demand for IT assets in this segment, which will materialise as the economy begins to improve,” he added.

“Meanwhile, the strongest growth is still among mid-sized companies, which are more nimble than very large enterprises and less exposed to economic volatility than the smallest businesses.”

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