European IT Supplier Industry Outlook Survey 2011â€“2012
In addition to expansion in emerging regions, European IT companies also plan to expand their presence in existing markets. Respondents identify their key business concern in 2011 as â€˜cost containmentâ€™, and in line with this expect consolidation to increase as large companies take over smaller companies to consolidate competencies and reduce costs. Suppliersâ€™ marketing budgets are also set to increase in order to attract and retain more customers.
IT industry is confident about revenue growth in 2011
ICD Researchâ€™s survey indicates that the majority of IT industry respondents are optimistic about their companyâ€™s revenue growth in 2011. Reasons behind this optimism include strong growth in emerging economies such as Eastern Europe, driven by rising demand for mobility solutions. As a result of growth, many foreign companies are targeting expansion within Europe, particularly in light of the discovery of shale gas plays in Eastern and Western Europe.
Companies plan to expand their presence in existing markets, increase products and services, and improve efficiency
Survey results show that the three most expected business changes for IT industry buyer respondents in 2011 are: to â€˜expand in current marketsâ€™, add â€˜new products and servicesâ€™ and focus on â€˜improving operational efficiency.â€™ In order to achieve these goals, companies plan to invest in the automation of processes, launch new and innovative products and services, streamline business processes and manage prices.
Respondents expect consolidation to increase in 2011
The majority of respondents expect either a â€˜significant increaseâ€™ or an â€˜increaseâ€™ in consolidation in the IT industry in 2011, and the UK, Scandinavia, Germany and France are expected to host the most consolidation activity. Respondents expect that consolidation will increase as large IT industry buyers seek smaller, specialized companies to strengthen their core competencies, reduce costs and strengthen their competitive standing.
China, India, the Middle East, Brazil and Eastern Europe are key emerging regions for growth
The five regions which respondents expect to deliver the most growth potential in 2011 are: China, India, the Middle East, Brazil and Eastern Europe. In these regions, hi-tech industries such as the IT industry have grown as a result of the large-scale availability of a cost competitive workforce. In China, growth of the banking and financial services industries has led to increased demand for IT solutions to match levels of service in developed nations.
â€˜Cost containmentâ€™ remains a leading concern from the 2010 survey
In both 2010 and 2011, respondentsâ€™ key concern is â€˜cost containmentâ€™, and in the 2011 survey respondents also identify â€˜market uncertainty,â€™ â€˜responding to pricing pressureâ€™ and the â€˜retention or recruitment of skilled staffâ€™ as leading business concerns. As cost containment is a key concern, IT companies are actively seeking ways to contain costs and improve profitability through the automation of production processes, investment in new technologies and efficiency improvement drives.
Buyers want suppliers to â€˜innovate productsâ€™
Buyer respondents highlight that the most important supplier action to gain buyersâ€™ business is to â€˜innovate products.â€™ This was followed by the need to â€˜improve customer serviceâ€™ and â€˜engage in partnerships to optimize working capital and reduce costs.â€™ High levels of competition in the technology industry have forced buyers to innovate products in order to remain competitive, and technological innovations can help to reduce costs, develop efficient processes and quickly bring products to the market.
IT industry suppliers expect marketing budgets to increase in 2011
Survey results show that on average, supplier respondents expect marketing budgets to increase by nearly 6% over the next 12 months, as companies plan to increase revenue and market share, and enter profitable emerging markets. Companies have also begun to allocate a larger portion of their marketing budgets to â€˜social media and networking sitesâ€™, such as Facebook, Twitter and LinkedIn, as these provide direct access to millions of potential customers. Suppliers also indicate that they plan to increase investment in â€˜corporate brand websitesâ€™ and â€˜online portals.â€™
Suppliers use marketing to acquire and retain customers
Of all IT industry suppliers, nearly 70% highlight â€˜customer retentionâ€™ as their key marketing aim, followed by â€˜customer acquisitionâ€™ and â€˜lead generationâ€™, and these aims have not significantly changed since the 2010 survey. Regardless of company turnover, respondents use marketing to retain customers, as over 90% of respondents from large companies, and nearly 90% of respondents from small and medium companies highlight this as their companyâ€™s key marketing aim.
To purchase the full version of â€˜Competing for Share of European IT Industry Spend In 2010-2011: Supplier Marketing & Sales Strategies & Industry Outlookâ€™, please click here.
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