Vertical Market Forecast Update: Bipolar Trends Anticipated

Transcription

1 Gartner Dataquest Alert Vertical Market Forecast Update: Bipolar Trends Anticipated IT Spending Overview Gartner Dataquest has just released its midyear vertical market forecast revision. The Global Industries forecast projects IT business spending worldwide to reach $2.4 trillion by 2007 (see Figure 1). But growth prospects vary widely across the major vertical markets. Some industries display signs of continued growth, such as healthcare, which is growing at 6.6 percent compound annual growth rate (CAGR) and projected to reach $93.7 billion by Other industries show more uncertainty (such as manufacturing) or are moving from a decline to a flat outlook (such as communications in North America in 2003.) IT management (IT outsourcing) and process management (business process outsourcing, or BPO) offer the highest growth rates in IT services spending. For example, process management spending in retail and utilities industries will show CAGR growth of 10.2 percent and 10.4 percent, respectively. Figure 1 Business IT Spending by Vertical Market, Agriculture, Mining and Construction Communications Discrete Manufacturing Education Financial Services Healthcare Local and Regional Government National and International Government Process Manufacturing Retail Trade Services Transportation Utilities Wholesale Trade Billions of Dollars Source: Gartner Dataquest (August 2003) 10 September Gartner, Inc. and/or its Affiliates. All Rights Reserved. 1

2 Comparative Forecast Notes Some mildly encouraging trends have developed since the last forecast was completed six months ago. The comparative five-year IT services outlook among verticals in the United States projects recovery in most industries. In January 2003, Global Industries forecast a 3.3 percent decline in communications industry global IT spending. The forecast released in August 2003 indicates a positive 0.6 percent growth in that turbulent industry. Similarly, discrete manufacturing spending is forecast to increase from 2.7 percent CAGR in the January 2003 forecast, to 5.0 percent in the current version. U.S. wholesale trade IT services spending is forecast to grow at 5.9 percent CAGR during through 2007 compared with 2.3 percent earlier. Based on our new forecast, Gartner Dataquest predicts that IT spending's absolute decline in most industries is now behind us. Vertical Market Spending in Outsourcing Process management is projected to grow at a 9.1 percent CAGR to $134 billion worldwide in IT management and process management services have gained real traction in most vertical markets, reflecting the continuing pressure on enterprise IT departments to reduce costs. Healthcare organizations have embraced outsourcing as a way to stem IT costs and improve IT responsiveness and reliability. Historically considered a technology laggard, the healthcare industry now has the highest vertical market process management growth rate 12.4 percent CAGR and is projected to reach $7.1 billion by Financial service providers look to outsourcing for optimization support and transformational strategies. Financial services process management is forecast to grow at a 9.6 percent CAGR to $34 billion in Post-Enron issues have created greater interest in outsourcing among utility and energy industry executives. This market will grow at a 10.4 percent CAGR to $5.4 billion in Table 1 shows worldwide process management spending by vertical market. 10 September Gartner, Inc. and/or its Affiliates. All Rights Reserved. 2

3 Table 1 Worldwide Process Management Spending by Vertical Market, (Billions of Dollars) CAGR (%) Agriculture, Mining and Construction 980 1, Communications 8,455 11, Discrete Manufacturing 10,057 14, Education 1,818 2, Financial Services 21,492 34, Healthcare 3,986 7, Local and Regional Government 4,317 7, National and International Government 4,839 8, Process Manufacturing 8,253 11, Retail Trade 5,371 8, Services 6,255 8, Transportation 4,623 7, Utilities 3,281 5, Wholesale Trade 2,907 4, Total 86, , Source: Gartner Dataquest (August 2003) Spending on IT products and services will continue to vary widely across industries, subindustries, regions, countries, and product and service segments. IT vendors are able to gain valuable insight into the opportunities and risks in these disparate markets through access to the detailed information provided in this updated Global Industries forecast database. The Global Industries Worldwide Vertical Forecast Database (ITGI-WW-DB-DA02) provides IT business spending projections for 14 primary and 43 secondary vertical markets, seven regions and 40 countries. Table 2 illustrates the classification and segmentation detail for the verticals covered. 10 September Gartner, Inc. and/or its Affiliates. All Rights Reserved. 3

4 Table 2 Vertical Market Coverage: 43 Subindustries Tier 1 Industry Segmentation Agriculture, Mining and Construction Discrete Manufacturing Process Manufacturing Retail Trade Wholesale Trade Transportation Communications Utilities Education Local and Regional Government National and International Government Healthcare Financial Services Services Source: Gartner Dataquest (August 2003) Tier 2 Subsector Industry Agriculture Mining Construction Transportation Equipment Computer and Electronic Products Industrial and Electrical Equipment Medical Equipment and Supplies Other Discrete Manufacturing Pharmaceutical and Medicine Chemical, Plastics and Rubber Petroleum and Coal Textiles and Apparel Metal, Wood, Minerals, Paper and Publishing Consumables General Retailers Specialty Retailers Grocery Restaurants and Hotels Wholesale Durable and Nondurable Goods Rail and Water Motor Freight Air Transport Pipelines Warehousing, Couriers and Support Services Wireless Wireline Satellite and Other Communications Broadcasting and Cable Electric and Gas Water Primary and Secondary Education Higher Education Local and Regional Government Defense and Intelligence Civil Healthcare Provider Banking Securities Insurance (Other Than Health) Health Insurance (Payer) Software Publishers IT Services Providers Professional, Scientific and Technical Services (Except IT) Real Estate Business and Consumer Services 10 September Gartner, Inc. and/or its Affiliates. All Rights Reserved. 4

5 Clients can customize the data specific to their interests in subvertical, country level and IT spending segments within this database. Forecast segments include external IT services (with six service lines), internal services, hardware, software, telecommunications services and telecommunications equipment. The IT business spending forecast segments are as follow: External spending Hardware IT services Product support Hardware maintenance and support Software maintenance and support Professional services Software Consulting Development and integration IT management Process management Telecommunications Equipment Services Internal Spending About the Global Industries Practice The Global Industries team within Gartner Dataquest provides IT vendor clients with global IT spending forecasts and market opportunities by vertical market, product and service component, and geography. Global Industries combines in-depth, demand-side surveys with supply-side interviews and surveys to provide clients with a panoramic view of the IT industry within each vertical market. Look for upcoming teleconference on vertical market trends and database demonstrations in the fourth quarter. By Susan Cournoyer, Geraldine Cruz, Robert Goodwin, Venecia Liu, Cynthia Moore, Jeff Roster and Rishi Sood 10 September Gartner, Inc. and/or its Affiliates. All Rights Reserved. 5

6 This document has been published to the following Marketplace codes: ITSV-WW-DA-0210 For More Information... In North America and Latin America: In Europe, the Middle East and Africa: In Asia/Pacific: In Japan: Worldwide via gartner.com: The content herein is often based on late-breaking events whose sources are believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The conclusions, projections and recommendations represent Gartner's initial analysis. As a result, our positions are subject to refinements or major changes as Gartner analysts gather more information and perform further analysis. Entire contents 2003 Gartner, Inc. and/or its Affiliates. All rights reserved. Reproduction of this publication in any form without prior written permission is forbidden