While IT spending is broadly heading in the right direction this year, thanks to upgrade cycles for cloud and mobile, there’s a lot of underlying activity across vertical industries which makes analysing and identifying opportunities a more complex exercise. In fact, having access to a full view of your target markets by industry and company size should be required reading for any strategic or tactical planning exercise. Only by understanding the direction of IT spending at an industry level can you hope to formulate a complete picture of upside and downside scenarios for both the short and the long term.
IT Spending Growth: Financial Services
At a high level, total IT spending growth is currently led by financial and professional services firms. This includes cloud service providers, most of which are classified in the professional services vertical (exceptions are Amazon and some telco providers), and which are once again ramping up their spending in infrastructure as end-user demand for public cloud services continues to account for a growing proportion of IT budgets across various other sectors. Professional services IT spending will increase by 6% this year, including 9% growth in server and storage spending.
Financial services IT budgets will be up by more than 5%, led by banking. Financial firms are particularly focused on software investments this year, with spending on applications set to increase by 9% and application development & deployment by 8.5%. The public sector, where overall growth will be somewhat weaker (+3.5% this year), software is also driving the most significant budget increases as governments begin to adopt 3rd platform solutions and upgrade existing applications.
IT Spending Growth: Public Sector
There are also variations by geography. In Asia Pacific, public sector spending on project-oriented IT services is increasing by more than 6%, compared to just 2% in the US. Financial firms in the US are really ramping up their software budgets, with application D&D expected to surge by 13% in 2017, while public sector spending on this software market in Latin America will be flat this year as governments continue to adjust to programs of austerity as part of the recovery from economic slowdown (especially in Brazil, where public sector AD&D spending will decline). In some regions, like the Middle East & Africa, public sector spending is likely to ramp up in the next few years as major projects and initiatives begin to drive more technology investments.
IT Spending Growth: Consumer
Consumer spending will be up this year, mainly in emerging markets where smartphone sales will be stronger than last year, but consumer spending will tail off through the forecast period in most countries as the phone installed base matures and other technologies fail to pick up the slack (consumer tablet sales are still flat or down in some regions, although commercial tablet sales are picking up). SMB spending will lag in some countries (e.g. Japan) while picking up in others (e.g. US and Canada).
This is all just the tip of a giant, free-floating iceberg. In IDC's Semiannual Worldwide IT Spending Guide by Industry and Company Size, we segment 108 technologies by 20 vertical industries and 5 company size segments in more than 50 countries, making for almost 3.5 million data points which can help IT suppliers to target the fastest-growing short term opportunities while keeping another eye on the long term potential for sectors, industries and company size bands to break out from a low installed base into major new opportunities.