IT Spending a Trillion Dollar Deal

Investment in IT continues to grow, closing in on $1.48 trillion by 2010,
according to a new IDC research report.

The study, from IDC’s worldwide vertical market research program,
forecasts software spending alone will reach $327 billion by 2010,
representing a five-year compound annual growth rate (CAGR) of 7.7 percent.
Healthcare, communications and government are the three largest software
markets sited by the report.

Hardware spending will reach $562 billion worldwide in the 2006-2010
timeframe, which IDC said represents a significant, rise led by volume
servers, peripherals and storage, and networking equipment. The main drivers
are strong spending from the home business and consumer, communications, and
government sectors.

Rounding out the top three spending areas, IT services will reach $587
billion in 2010, which represents a five-year CAGR of 5.8 percent. IDC said
the largest market opportunities in services are in government, banking, and
discrete manufacturing.

Still, IDC points out there will be regional differences in how much
growth can be expected.

“Regional dynamics can significantly impact top business challenges in
different industries,” said Anne Lu, program manager in IDC’s Worldwide
Vertical Market research program.

“IT vendors should look closely at the unique industry and regional
trends and business challenges of each target market and then segment their
customers based on these needs. This
needs-based segmentation should help deliver a win-win solution for IT
suppliers and their customers. Customers will get the strategic solutions
they need – and subsequently buy more – and IT suppliers will in turn
increase sales and profits.”

Near-term, Merrill Lynch issued its own research this year that predicts
IT spending will grow 4.2 percent in 2007, based on its survey of Chief
Information Officers (CIOs). Merrill Lynch said IT spending finished 2006 up
3.4 percent, which was a dip from 4.4 percent spending in 2005.

Among the CIOs surveyed, Merrill Lynch said 72 percent intend to increase
their spending with external providers this year. That’s a big jump from
last quarter’s 46 percent figure and 58 percent a year ago.

Consultants and system integrators stand to gain if the Merrill Lynch
survey results hold up, which pegs budget growth for consulting to increase
4.6 percent year-to-year. Merrill Lynch pointed to such vendors as Accenture
and BearingPoint and the consulting divisions of global companies like IBM
(Quote), EDS (Quote)and CSC (Quote)as
standing to benefit.

This article was first published on InternetNews.com. To read the full article, click here.

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