This will be another year of modest IT spending, IDC Canada has warned the industry. But there are areas in which resellers can be encouraged.
“”They should be enthused about the hardware predictions for the year,”” Denis Vance, the division’s chief research officer said in an interview.
He
believes spending on PCs, servers and storage will jump 5.4 per cent over last year. It will be driven by the so-called Y2K upgrades, the continuing push to convert desktop PCs to notebooks and demand for storage devices.
“”This is the first good news year for hardware essentially since 1999,”” he said, extending a spending bounce which began in the fall.
Among the expectations is that Canadian spending on new Windows-based servers will finally eclipse Unix. Unix lost that race in the U.S. last year. Sales of Linux-based servers will steadily climb.
Those who capitalize on that spending by upselling their services will be winners, he agreed.
Managed network and desktop help services for small and medium businesses will be high-growth areas, with an expected 9.3 per cent increase in spending.
“”If you can tap into that . . . there could be one or two good years ahead for your readers,”” he said. “”Better than they’ve seen in quite a while.””
But the blip won’t last long: Hardware spending next year will increase only two per cent over this year.
Vance outlined 10 trends the Canadian IT industry will see this year, based on interviews with 100 C-level executives, which resellers could use to plot their strategy.
“”The overwhelming business issue was the need to improve productivity,”” he noted. Their biggest concern about IT was its “”ability to change and adapt in a timely manner.””
When asked how vendors can help improve their return on IT investment, respondents pointed to increased training for users on how to use applications and systems.
“”Software vendors have got to make things [applications and installation] easier if they want to continue to see their business grow,”” he warned.
Vendors who offer tightly tailored solutions to specific industry segments will prosper, he added.
“”We will also see some loosening of the IT training budgets this year,”” Vance said, “”consistent with executive recognition that productivity is served by a better trained staff.””
Overall he expects IT spending to be up 4.3 per cent over 2004 to hit $38 billion, with a compound annual growth rate for the next four years of 3.5 per cent.
Hardware isn’t the only sector that will see a spending hike. Software sales are expected to go up 3.3 per cent this year over 2004, while services spending will increase 3.7 per cent.
Among services there will be demand for consulting and integration in IP-related technologies, assessment and implementation and security. But that demand will also be accompanied by pressure from customers on fees.
Outsourcing will continue to be big, particularly systems infrastructure hosting, which will expand 14 per cent over last year. Vance couldn’t say how much of that will go offshore.
But, he added, if the dollar continues to increase it will endanger outsourcing business from the U.S.
Attention to the SMB market will continue, expected to attract 27 per cent of IT spending.
Revenues generated from wireless usage — including data — will grow at a 10 per cent clip this year.
However, demand for RFID solutions will appear only late this year, with spending totalling a mere $10 million in 2006.
