Vertical Market Trends: Western Europe, (Executive Summary) Executive Summary

Transcription

1 Vertical Market Trends: Western Europe, (Executive Summary) Executive Summary Publication Date: 21 March 2003

2 Authors Cathy Tornbohm Peter Redshaw This document has been published to the following Marketplace codes: ITSV-WW-EX-0291 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: 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. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice

3 Vertical Market Trends: Western Europe, (Executive Summary) Total European IT spending was $402.8 billion in Gartner Dataquest predicts this will grow at 4.2 percent compound annual growth rate () from 2001 to 2006, and reach $495.6 billion in But 2003 will be another tough year for IT vendors. It is increasingly important for vendors to understand the challenges they will face in their particular industry sector. The financial services sector still spends more than any other industry sector on external IT services in Western Europe, while the most rapid spending increases between 2001 and 2006will be in healthcare and education. The associated report profiles the major trends shaping Western Europe's main vertical sectors and provides estimated market sizes in 2001 and forecasts for 2002 to The total market size for each vertical sector is the sum of all external IT services sold in Western Europe and the major technology components of software, hardware, and telecommunications services and equipment. This total does not include companies' expenditure on internal IT spending and staffing, many hardware components, business process management services or consumer IT spend. Evaluation of vertical markets is a complex process, requiring examination of quantitative and qualitative variables in an integrated, systematic review. These evaluations are best supported by forecasts of vertical markets and subsegments. Gartner Dataquest conducts judgment-based forecasting using a bottom-up model which: Provides analysts with supply, demand, economic and demographic information. Assures top-down integration with related forecasts. Enables global review of both qualitative and quantitative forecast assumptions. Our forecast draws on Gartner Dataquest's IT Services Europe Vertical Forecast Database a detailed analysis of IT vendors' revenue and DRI- WEFA economic data. For more information, see "Vertical Market Forecasts Compared: Western Europe, 2002" (ITSV-WW-DP-0468), "Slow Recovery for IT Business Spending in Western Europe" (ITSV-WW-DA-0184) and "IT Services Market Forecast: EMEA, " (ITST-WW-MT-0102). For information on Gartner Dataquest's forecasting methodology, see "Worldwide IT Services Market Definitions, 1Q03" (ITSV-WW-GU-0005). Table 1 and Figure 1 show the total Western European IT market size by technology group. Software is the fastest-growing technology group, with a of 8.0 percent to Gartner, Inc. and/or its Affiliates. All Rights Reserved. 1

4 2 Vertical Market Trends: Western Europe, (Executive Summary) Table 1 Total Western European IT Market Size by Technology Group, (Millions of Dollars) Hardware 68,383 61,935 62,580 63,454 64,740 65, % Software 25,198 25,464 27,134 30,111 33,352 36, % Telecommunications Equipment 66,430 49,317 49,521 55,241 61,363 66, % Telecommunications Services 96, , , , , , % External IT Services 146, , , , , , % Total 402, , , , , , % Figure 1 Total Western European IT Market Size by Technology Group, 2001 Telecommunications Equipment (16%) Hardware (17%) Telecommunications Services (24%) Software (6%) External IT Services (37%) Total Market, 2001 $402.8 Billion Table 2 and Figure 2 show total IT market size in 2001 by vertical industry.

5 Vertical Market Trends: Western Europe, (Executive Summary) 3 Table 2 Total Western European IT Market Size by Vertical Industry, Agriculture, Mining and Construction 1,159 1,131 1,234 1,321 1,411 1, % Communications 109,725 93,559 95, , , , % Discrete Manufacturing 47,049 47,800 49,899 52,245 54,938 57, % Education 5,583 6,047 6,504 6,971 7,474 7, % Financial Services 76,184 77,463 81,795 86,841 92,363 97, % Healthcare 11,675 12,429 13,910 15,597 17,407 19, % Local and Regional Government 19,251 19,805 21,129 22,553 24,094 25, % National and International Government 27,130 28,186 29,646 31,282 33,187 35, % Process Manufacturing 19,495 19,838 20,688 21,749 22,764 23, % Retail Trade 15,431 16,064 17,149 18,309 19,608 20, % Services 27,063 26,550 27,633 28,795 30,088 31, % Transportation 16,278 16,616 17,468 18,316 19,231 20, % Utilities 16,871 17,489 18,751 19,991 21,437 22, % Wholesale Trade 9,905 10,537 11,252 11,999 12,843 13, % Total 402, , , , , , % Figure 2 Total Western European IT Market Size by Vertical Industry, 2001 Local and Regional Government (4.8%) Process Manufacturing (4.8%) National and International Government (6.7%) Discrete Manufacturing (11.7%) Services (6.7%) Retail Trade (3.8%) Transportation (4.0%) Utilities (4.2%) Healthcare (2.9%) Education (1.4%) Wholesale Trade (2.5%) Agriculture, Mining and Construction (0.3%) Financial Services (18.9%) Communications (27.2%) Total Market, 2001 $402.8 Billion Table 3 shows the total external IT services market, which is represented by vertical industry for 2001 in Figure 3.

6 4 Vertical Market Trends: Western Europe, (Executive Summary) Table 3 Western European External IT Services Market, (Millions of Dollars) Agriculture, Mining and Construction % Communications 23,777 23,713 24,584 25,774 27,202 28, % Discrete Manufacturing 19,711 20,066 20,769 21,672 22,936 24, % Education 2,256 2,404 2,554 2,732 2,954 3, % Financial Services 30,893 31,734 33,273 35,162 37,625 40, % Healthcare 4,715 5,030 5,580 6,220 6,998 7, % Local and Regional Government 8,036 8,340 8,857 9,471 10,169 10, % National and International Government 11,397 11,797 12,263 12,857 13,766 14, % Process Manufacturing 8,052 8,192 8,409 8,825 9,362 9, % Retail Trade 6,285 6,561 6,924 7,370 7,946 8, % Services 13,755 13,774 14,248 14,822 15,607 16, % Transportation 6,818 6,937 7,234 7,569 8,013 8, % Utilities 6,822 7,146 7,630 8,046 8,686 9, % Wholesale Trade 4,010 4,302 4,538 4,828 5,202 5, % Total 146, , , , , , % Figure 3 Western European External IT Services Spending by Vertical Industry, 2001 Process Manufacturing (5.5%) National and International Government (7.8%) Services (9.4%) Discrete Manufacturing (13.4%) Local and Regional Government (5.5%) Utilities (4.7%) Transportation (4.6%) Retail Trade (4.3%) Healthcare (3.2%) Wholesale Trade (2.7%) Education (1.5%) Agriculture, Mining and Construction (0.1%) Financial Services (21.1%) Communications (16.2%) Total Market, 2001 $146.7 Billion GermanyandtheUnitedKingdomspendthemostonIT(seeTable4).The United Kingdom is the largest market for external IT services (see Table 5).

7 Vertical Market Trends: Western Europe, (Executive Summary) 5 Table 4 Western European IT Market by Country, (Millions of Dollars) Austria 8,393 8,212 8,578 9,027 9,571 10, % Belgium 10,989 10,744 11,266 11,910 12,557 13, % Denmark 12,209 12,603 13,460 14,505 15,517 16, % Finland 6,633 6,335 6,502 6,771 7,159 7, % France 54,422 53,435 56,396 60,083 64,307 68, % Germany 77,767 75,571 78,799 84,176 89,392 94, % Greece 4,562 4,297 4,545 4,930 5,331 5, % Ireland 4,223 4,120 4,345 4,620 5,004 5, % Italy 39,209 37,713 39,267 41,241 43,946 46, % Netherlands 24,216 23,714 24,888 26,586 28,346 30, % Norway 14,306 14,541 15,296 16,136 16,961 17, % Portugal 4,606 4,381 4,595 4,989 5,314 5, % Rest of Western Europe 2,286 2,315 2,455 2,574 2,724 2, % Spain 23,452 22,736 24,011 25,876 27,622 29, % Sweden 14,501 14,092 14,490 15,192 16,091 16, % Switzerland 12,627 12,183 12,798 13,575 14,403 15, % United Kingdom 88,400 86,523 90,648 96, , , % Total 402, , , , , , % Table 5 Western European External IT Services Market by Country, (Millions of Dollars) Austria 3,146 3,275 3,436 3,628 3,857 4, % Belgium 4,022 4,040 4,168 4,383 4,670 4, % Denmark 2,809 2,853 2,939 3,087 3,270 3, % Finland 2,454 2,450 2,513 2,625 2,783 2, % France 20,829 21,545 22,622 23,605 25,144 26, % Germany 27,649 28,239 29,477 30,972 33,034 35, % Greece % Ireland 1,371 1,393 1,447 1,509 1,601 1, % Italy 11,949 12,274 12,868 13,613 14,425 15, % Netherlands 11,072 11,385 11,967 12,646 13,451 14, % Norway 2,501 2,538 2,626 2,744 2,901 3, % Portugal ,033 1, % Rest of Western Europe % Spain 6,345 6,662 7,072 7,475 7,975 8, % Sweden 6,239 6,229 6,415 6,682 7,062 7, % Switzerland 4,071 4,228 4,445 4,665 4,919 5, % United Kingdom 40,077 40,850 42,770 45,537 49,084 52, % Total 146, , , , , , %

8 6 Vertical Market Trends: Western Europe, (Executive Summary) Gartner Dataquest Perspective All vertical industries increased their spending on IT external service providers in But we predict that 2002 will have been a more difficult year, especially in the communications, process manufacturing and finance sectors. And 2003 will not be any easier. One of the main drivers in 2001 and 2002 for spending on IT was the attempt to achieve cost savings. Gartner Dataquest expects many sectors to increase total spending on IT, especially healthcare, education, retail and wholesale trade, and utilities. Increases will be fueled by: Healthcare: Electronic patient records, for which demand may exceed supply. Education: More efficient administration and more flexible provision of learning (including Web services). Retail trade: In-store systems to cut costs and enhance the customer experience. Utilities: Energy trading and customer acquisition and retention systems. Sectors that will not experience a dramatic change in spending include transportation and financial services, where expenditure will be driven by efficiency issues. The communications and services sectors will experience temporary declines in IT spending from the levels achieved in 2001 (either for IT overall or in IT services). Subsectors getting more attention in 2003 from IT vendors include media and entertainment and the mobile divisions of telecommunications companies. Gartner Dataquest recommends that IT vendors: Work with customers and partners that have fewer customized elements in the implementations of standard offerings, such as those for back-office processes and enterprise resource planning. Cultivate knowledge of the sectors in which they operate or partner with companies that do. Understand how new technologies such as wireless and Web services will be adopted and plan for them. Links The Market Trends report "Vertical Market Trends: Western Europe, " is published to Gartner Dataquest's IT Services Europe and Global Industries Worldwide Clusters: ITSV-EU-MT-0106 ITGI-WW-MT-0108