Monday, 5 December 2011

Overview of IT Spending 2011

IT spending in 2011 saw an increase of around 7% as reported by IDC taking the global technology spend to 1.6T USD. The outlook for 2012 is for almost identical percentage points growth but with the bulk of this growth coming from the emerging markets.
IT Services and Software market spending are expected to increase further with the BRIC nation software markets growing at a CAGR of 14% in 2010-2015. (IDC, Black book, Q3 2011).
Gartner is forecasting that spending on Smartphone and Tablets will overtake PCs by 2015. Further growth in IT spending will be due to the increased adoption of emerging technologies including cloud computing, mobile applications, big data and security software. It is expected that these disruptive technologies will drive the top line growth by 6%.
The research firm also predicts that by 2015, public cloud services will account for 46% of new growth in IT spending with SaaS accounting for roughly three quarters of all spending on public cloud IT services (IDC, Black Book, Q3 2011). What is clear is that the organization that controls the public cloud services industry will have a lion share of the market and have a sustainable competitive advantage. The competition between vendors to control as much of the public cloud services is expected to intensify in the coming years with the winner profiting from the opportunity. 

In line with the emergence of these disruptive technologies, tech M&A has experienced a rise in acquisition of cloud, business intelligence and analytics, virtualization and mobility deals in the last three quarters (E&Y, Tech M&A, Q3 2011). For example, SAP's announcement this week of the acquisition of SuccessFactors Inc, a maker of software used to manage employee performance, as direct competition to Oracle’s recent acquisition of RightNow, a software company that develops customer relationship management software for enterprise organization. While global M&A declined by 9%, technology M&A recorded only a decline of 2% with an average value per deal of 221M USD in the third quarter, which was an increase of 26% as compared to last year’s third quarter. The third quarter of 2011 recorded two 10B+ USD deals (Google’s acquisition of Motorola Mobility for 11.8B USD and HP’s acquisition of Autonomy for 10.2B USD), a feat not repeated since 2000 of the same quarter.

Going forward we can expect a rise in the number of cloud computing, social networking, smart mobility eco-friendly deals in addition to an increase in the rate at which technology companies acquire other industries. Intel Capital’s recent announcement of its AppUp Fund that will look to invest 100M USD in companies ranging from digital, cloud computing technologies to mobile and finance startups sets the pace for corporate venturing.
All in all what is apparent is that though the macroeconomic climate is still uncertain there is an increasing dependence on technology, the speed with which it changes, and the need to have a sustainable competitive advantage with new developments (disruptive technologies) creating a exceptional opportunity for organisations to build progressive business strategies around technology, delivering money-spinning results.

3 comments:

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