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2011 U.S.

IT Spending Outlook by Vertical: Latest Trends and Key Priorities


Ruthbea Clarke, Ted Dangson, and Monika Kumar U.S. Vertical Markets Research Group Web Conference, June 29, 2011

Copyright IDC. Reproduction is forbidden unless authorized. All rights reserved.

Agenda
Survey methodology and demographic details 2011 IT budget initiatives, trends and benchmarks 2011 IT services trends by vertical Smart technologies 2011 software initiatives and trends by vertical
Industry specific software initiatives Business analytics

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IDC Visit us at IDC.com and follow us on Twitter: @IDC and @IDCInsights May-12

IDCs Annual U.S. Vertical View Survey


Respondents More than 5,700 respondents stratified across 24 industries full representation of private and public sector Industry respondents stratified across 5 company size segments

Respondents range from IT/LOB Managers to executive-level management


Topics Covered Budgetary survey covers end-user spending on dozens of IT products and services: Hardware, Software, Business Analytics, IT Services, BPO, Telecom Services Business Drivers and Top IT Initiatives Investments in Emerging Technologies Vendor Perception Timeline Survey was fielded from December 2010 through March 2011
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Agenda
Survey methodology and demographic details 2011 IT budget initiatives, trends and benchmarks 2011 IT services trends by vertical Intelligent technologies 2011 software initiatives and trends by vertical
Industry specific software initiatives Business analytics

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IDC Visit us at IDC.com and follow us on Twitter: @IDC and @IDCInsights May-12

Top Business Initiatives Driving IT Investments by Segment


Large Enterprise
Increasing productivity IT reliability and efficiency Increasing revenue Executing business strategy Aligning business and IT
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0%

N= 2,420

SMB
Increasing revenue Increasing productivity IT reliability and efficiency Retaining existing customers Improving customer engagement

N= 1,816

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

Source: IDC Vertical Research Group IT Survey, 2011 IDC Visit us at IDC.com and follow us on Twitter: @IDC and @IDCInsights

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May-12

Top IT Initiatives in 2011 by Segment


Large Enterprise
Security Business Intelligence / Analytics Smart Technologies Data Center Consolidation Virtualization
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0%

N= 2,420

SMB
Security Social Media Mobility Smart Technologies Content Management

N= 1,816

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

Source: IDC Vertical Research Group IT Survey, 2011

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2011 IT Budget: External IT Spend as a Percentage of Revenue


Banking & Credit Institutions
Securities & Investment Services Communcation & Media

Professional Services Consumer & Recreational Services Transportation


Utilities Insurance

Average IT intensity = 1.2%

Discrete Mfg Process Mfg Retail Wholesale


Healthcare

Construction Resource Industries 0.00%


Source: IDC Vertical Research Group IT Survey, 2011

0.50%

1.00%

1.50%

2.00%

2.50%

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Overall, 2011 IT Budgets Show Increases Over 2010 Budgets


In aggregate, more respondents state their companies plan to increase spending, after emerging from a state of rapid change due to the economic climate
Change in IT Budgets
60% 50% 40% 30% 20% 10% 0% 2008 Increase 2009 Decrease 2010 Stay the Same 2011

Note: N = 6,419 for 2010, N = 4,905 for 2009, N = 5,175 for 2008 Source: IDC Annual Vertical Group IT Survey, 2011 IDC Visit us at IDC.com and follow us on Twitter: @IDC and @IDCInsights

Percentage Respondents

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2011 IT Budget: IT Growth vs. GDP Industry Growth


Average IT Growth = 5.6%
7% 6% 5% 4% 3%
Construction
Wholesale

Transportation Discrete Manufacturing Retail


Utilities

2011 U.S. GDP Growth by Industry

GDP Growth = 3.0%

Communications and Media Process Manufacturing

Consumer & Recreational Services Securities and Investment Services Education


Resource Industries

Healthcare

Professional Services

2% 1% 0% 2% -1%
-2%

Banking

3%

Insurance

4%

5%

6%

7%

8%

9%

Government

Source: IDC, 2011 IDC

2011 IT Spending Growth


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May-12

Visit us at IDC.com and follow us on Twitter: @IDC and @IDCInsights

2011 IT Budget: New IT Initiatives vs. Lights On Investments


2011
New Initiatives 23.9% Infrastructure 43.1%

2010
New Initiatives 18.5% Infrastructure 45.0%

Essential Software 33.0%

Essential Software 36.5%

Source: IDC 2011 Vertical View Survey, N = 3153 respondents in enterprises with 1000+ employees

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2011 IT Budget: IT Intensity and New Initiative Spending


29%
Securities and Investment Services Communications and Media

28%

Percentage of IT Budgets Spent on New Initiatives

27%

26%
Professional Services
Banking

25%
Insurance Construction Process Manufacturing Transportation Utilities

24%
Retail Healthcare

Consumer & Recreational Services

23%

22%

Wholesale Resource Industries


Discrete Manufacturing

21%

20% 0.5% 0.7% 0.9% 1.1% 1.3% 1.5% 1.7% 1.9% 2.1%

IT as a Percentage of Revenue
Source: IDC Vertical Research Group IT Survey, 2011, N = 3153 respondents in enterprises with 1000+ employees IDC Visit us at IDC.com and follow us on Twitter: @IDC and @IDCInsights

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May-12

Agenda
Survey methodology and demographic details 2011 IT budget initiatives, trends and benchmarks 2011 IT services trends by vertical Intelligent technologies 2011 software initiatives and trends by vertical
Industry specific software initiatives Business analytics

13
IDC Visit us at IDC.com and follow us on Twitter: @IDC and @IDCInsights May-12

2011 IT Services Budget: IT Services Spend as a % of Revenues


Wide variations exist by vertical and by company size
Banking & Credit Institutions Life Sciences Securities & Investment Services Consumer & Recreational Services Communcation & Media Professional Services Transportation Insurance
Utilities Process Mfg

Large SMB

Discrete Mfg Wholesale Retail Healthcare Construction Resource Industries Oil & Gas 0.0% 0.1% 0.2% 0.3% 0.4% 0.5% 0.6% 0.7% 0.8%

Source: IDC Vertical Research Group IT Survey, 2011, N = 5,710 IDC Visit us at IDC.com and follow us on Twitter: @IDC and @IDCInsights

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May-12

U.S. IT Services Spend by Vertical


Government, banking, manufacturing spend most; communications, healthcare providers, and professional services growing fastest.
10%
Total U.S. IT Services Spend 2011 = $226B

Banking Insurance Securities Discrete Mfg

8%

2010-2011 Growth

6%

Process Mfg Retail Professional Services Consumer Services Healthcare Transportation Comms & Media Utilities

4%

2%

0% 0% 5% 10% 15% 20% 25% % Share of Spend , 2011


Source: IDC U.S. IT Services Vendor and Vertical Views, 2011 IDC Visit us at IDC.com and follow us on Twitter: @IDC and @IDCInsights

Government Education

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2011 IT Services Spend by Market and Vertical (Large Enterprises)


Banking

Insurance

Manuf acturing

Comms & Media

Healthcare

Prof essional Services

Utilities

Government

0% App Mgt ITO

25% IT Consulting NCIS SI CAD

50% HW Support

75% SW Support IT Training

100%

Source: IDC U.S. IT Services Vendor and Vertical Views, 2011 IDC Visit us at IDC.com and follow us on Twitter: @IDC and @IDCInsights

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May-12

Long-Term Drivers of Services Spending Growth


WW CAGR for Services Around Key Technologies

44.3%
15.1%

Professional services around cloud computing, analytics, and smart technologies will be a small but rapidly growing subset of overall IT services Part of IT megatrends that will shape IT growth over the next decade Services firms are at the center of this growth along the value chain from strategy to execution to support services for customers Key verticals like financial services, utilities, government, healthcare, and communications will be near term customers for many of these services

8.2%

3.8%

0%
Cloud

20%
Smart Analytics

40%
Total IT Services

Source: IDC U.S. IT Services Vendor and Vertical Views, 2011; Worldwide and U.S. Cloud Professional Services 2011-2015 Forecast, 2011 IDC Visit us at IDC.com and follow us on Twitter: @IDC and @IDCInsights

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May-12

Plans To Use External Services For Cloud In The Next 12 Months


IT consulting is expected to be used the most for cloud but services purchased vary by stage of adoption of vertical
Utilities

Q: In the next 12 months, what external services will your organization use to help research, implement, and/or deploy a cloud computing solution?

Banking

Process Manuf acturing


IT consulting

Insurance
Business consulting Systems integration

Discrete Manuf acturing

Custom application development


IT training and education We will not purchase outside services

Government

Lif e Sciences

Healthcare
0% 10% 20% 30% 40% 50%

0%
SI

10% 20% 30% 40% 50% 60% 70% 80%


CAD IT Consulting

Source: IDC Vertical Research Group IT Survey, 2011, N = 2,744 IDC Visit us at IDC.com and follow us on Twitter: @IDC and @IDCInsights

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Plans To Use External Services For Smart In The Next 12 Months


IT training and education is important for smart technology solutions
Lif e Sciences

Q: In the next 12 months, what external services will your organization use to help research, implement, and/or deploy a smart technology solution?
IT consulting

Discrete Manuf acturing

Government

Healthcare

Business consulting

Utilities
Systems integration IT training and education

Banking

Custom application development


We will not purchase outside services 0% 10% 20% 30% 40% 50%

Process Manuf acturing

Communications 0% SI 10% CAD 20% 30% 40% 50% 60%

IT Consulting

Source: IDC Vertical Research Group IT Survey, 2011, N = 2,394 IDC Visit us at IDC.com and follow us on Twitter: @IDC and @IDCInsights

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May-12

Agenda
Survey methodology and demographic details 2011 IT budget initiatives, trends and benchmarks 2011 IT services trends by vertical Intelligent technologies 2011 software initiatives and trends by vertical
Industry specific software initiatives Business analytics

20
IDC Visit us at IDC.com and follow us on Twitter: @IDC and @IDCInsights May-12

The Intelligent Enterprise


Uses information to Reduce costs Eliminate errors Improve customer relationships Accelerate / synchronize delivery Enhance / simplify decision making Create new options that enhance value
Intelligent Interactions, 2020 4B People

450B Interactions/Day

31B Devices

1.3T Tags/sensors

Uses smart technologies to Aggregate and gather data Discover, understand, and analyze information Plan, communicate and execute an optimal response

2T Fin. Trans.

25M Apps

Source: IDC, 2011 IDC Visit us at IDC.com and follow us on Twitter: @IDC and @IDCInsights

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May-12

Intelligent Enterprise Investment Timing


35% of surveyed enterprises are already using or implementing intelligent technology solutions
Q: Are smart technology solutions currently on your organizations technology roadmap?
Currently using or implementing 20%

Not on our technology roadmap 28%

Financial Services, Transportation, Communications

Plan to implement within 1 year 15% Researching without any commitments 19% Plan to implement within 3+ years 4%
Source: IDC Vertical Research Group IT Survey, 2011, N = 5,722 IDC Visit us at IDC.com and follow us on Twitter: @IDC and @IDCInsights

Utilities, Life Sciences, Healthcare, Manufacturing

Plan to implement within 2 to 3 years 14%

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Big Driver of Investment in Smart is Efficiency and Cost Reduction


Q: What are the top drivers for investing in smart technology solutions?

Increase Insight
Ability to have new information we couldnt see before To improve our strategic positioning in the future To improve our brand reputation

Increase Insight 31%

Efficiency and Cost Reduction


Better Efficiency and Reduce Costs 53%
Make quicker decisions Reduce and manage risk Be more efficient Contain costs

Improve Quality and Service


Customer intimacy To offer solutions our customers want Better integration of data from partners, suppliers, customers

Improve Quality and Service 16%

Source: IDC Vertical Research Group IT Survey, 2011, N = 4,479 IDC Visit us at IDC.com and follow us on Twitter: @IDC and @IDCInsights

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May-12

Intelligent Economy IT Investment


35% of surveyed enterprises are already using or implementing intelligent technology solutions
Q: In 2011, what percent of your organizations IT budget will be spent on smart solutions?
6.5% 4.5%

Cloud services, social media and smart phones for mobility equalize the playing field for SMBs in terms of accessing real-time data at affordable price points More than 30% of healthcare and government respondents plan to spend 5%-10% of budget on smart technology Transportation, securities and professional services plan to allocate the most budget; more than one-quarter of these respondents will spend between 10-20% of budget

21.9% 22.1% 0-1% 1-2.9% 3-4.9% 5-9.9% 10-19.9% 20% or more

22.4%

22.6%

Source: IDC Vertical Research Group IT Survey, 2011, N = 2,394 IDC Visit us at IDC.com and follow us on Twitter: @IDC and @IDCInsights

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May-12

Intelligent Solutions are a Multi-billion Dollar Opportunity


Worldwide spend on intelligent technologies, including non-traditional hardware and software, will reach $180 billion
200
180.4

160

120

117.9

80

40

0 2011 2014

Source: IDC, 2011 IDC Visit us at IDC.com and follow us on Twitter: @IDC and @IDCInsights

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May-12

Respondent Investment in Specific Intelligent Technologies


Smart technology investment is industry-specific
Healthcare: Electronic Medical Records Utilities: Smart metering Govt: Real time and/or predictive risk analytics Govt: Public saf ety/emergency management Banking: Customer analytics and BI Utilities: Demand response Govt: Traf f ic and Transportation Healthcare: Care Management - Wellness portals / online
Banking: Dynamic pricing Banking: Identity management

50% 50% 41.3% 31.5%


31.1% 29%

28.10% 26% 24.9% 23.4% 23% 22% 22% 22% 21% 20%

Retail: Point of sale systems (hardware, sof tware and Utilities: Dynamic pricing Utilities: Smart transmission/distribution grid Retail: Inventory /Warehouse management Retail: e-Commerce/ Multichannel selling sof tware Utilities: Condition-based/predictive maintenance

0%

10%

20%

30%

40%

50%

60%

Source: IDC Vertical Research Group IT Survey, 2011, N = 100-300 varies by industry; showing only industries and solutions where 20+% are investing. IDC Visit us at IDC.com and follow us on Twitter: @IDC and @IDCInsights

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Welcome to the Intelligent Economy


The combination of megatrends in IT come together in the third IT platform for industry growth. Technology winners will have a defined smart strategy for the long-term time horizon.

Trillions
of Things
of Users

Social Big data/ business analytics Mobile Cloud Mobile devices services broadband and apps

Billions
2011

Millions
of Apps

ClientLAN/ Internet Server

Hundreds of millions
of users

PC
1986

Tens of thousands
of Apps

Millions
of users

Thousands
of Apps

Source: IDC, 2011 IDC Visit us at IDC.com and follow us on Twitter: @IDC and @IDCInsights

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May-12

Agenda
Survey methodology and demographic details 2011 IT budget initiatives, trends and benchmarks 2011 IT services trends by vertical Intelligent technologies 2011 software initiatives and trends by vertical
Industry specific software initiatives Business analytics

28
IDC Visit us at IDC.com and follow us on Twitter: @IDC and @IDCInsights May-12

Top Initiatives and Software Budget Allocations for 2011


Q: In 2011, which of the following will be the top initiatives at your organization?
Expected software budget allocations for 2011 1. Industry specific software 2. ERP
Security

% of Budget 11.2% 7.6% 7.2% 7.1% 7.1% 6.9% 5.9%

3. Collaborative applications
Business Intelligence / Analytics

4. Operating systems 5. Security software

Smart Technologies

6. Content management
Data Center Consolidation

7. Enterprise system and network mgmt 8. CRM

5.8%
5.6% 5.6% 5.3% 5.0% 4.6% 4.3%

Virtualization

9. Authoring/Publishing
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0%

N = 2420

10. Database and data mgmt 11. Storage management 12. Development tools 13. Supply Chain applications 14. Business Analytics/Intelligence

Source: IDC Vertical Research Group IT Survey, 2011 IDC Visit us at IDC.com and follow us on Twitter: @IDC and @IDCInsights

N =2513

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Top Industry Software Investment Areas and Leading Vendors


Q: On a scale of 1 to 5, where 1 = not important and 5 = very important, please indicate the priority level of...
Leading Core Banking Vendors Other 43% Jack Henry

Banking

Importance 4.0 3.8 3.7 3.6 3.6

Healthcare 1. EMRs 2. Patient Billing and AR 3. Electronic Scheduling 4. Electronic Claims Submission/Reimburse ment 5. Patient Registration/Inpatient Admission, etc.

Importance 4.2
59%

Leading EMR Vendors

1. Fraud Detection and Prevention


2. Governance, Risk, Compliance (GRC) 3. Mobile Banking 4. Core Banking 5. Reporting / Performance Mgmt

Other Allscripts Epic Cerner

3.6 3.5 3.5


6% 6% 8%

Infosys

4% 10%

Tata (TCS) 12% Fidelity Information Services (FIS) Fiserv 14%

McKesson GE Healthcare

3.2

9% 13%

16%

Manufacturing 1. Production Scheduling 2. Quality Management 3. Order Management 4. Inventory Planning and Optimization 5. Sales and Operations Planning

Importance 3.8 3.7 3.7 3.7 3.6

Retail 1. Inventory/Warehouse Mgmt 2. Merchandise Mgmt 3. Price Optimization 4. POS Software 5. Logistics / Transportation Mgmt

Importance 3.6 3.5 3.5 3.4 3.3

Source: IDC Vertical Research Group IT Survey; Healthcare Solutions Market Share Guide; Banking Solutions Market Share Guide IDC Visit us at IDC.com and follow us on Twitter: @IDC and @IDCInsights

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May-12

How Business Analytics and Smart Technologies Rank Across Industries


500-999
100-499 1000-4999

Q: In 2011, which of the following will be the top IT initiatives at your organization?
Total
1-99 5000+
Communication & Media

Ranking among technology initiatives

1 2 3 4 5 6 7 8 9 Business Intelligence / Analytics Smart Technologies

Securities & Investments

Discrete Manufacturing

Process Manufacturing

Professional Services

Transportation

Ranking among technology initiatives

1 2 3 4 5 6 7 8 9 10 11 12 13 14

Life Sciences

Government

Healthcare

Education

Insurance

Banking

Utilities

Retail

Oil & Gas

Source: IDC Vertical Research Group IT Survey, 2011, N = 4236


IDC Visit us at IDC.com and follow us on Twitter: @IDC and @IDCInsights

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May-12

Business Analytics Adoption Levels by Industry


Q: Has your organization implemented a business intelligence / analytics solutions? Q: Does your organization have a stated Business Analytics/Intelligence strategy? Excludes Dont Knows

29% Yes No

71%

100.0% 92.7%
86.7% 86.7% 85.5% 85.3% 85.0% 84.6% 83.8% 82.3%

80.0%
56.2% 44.7% 57.9% 45.1% 60.8% 44.1% 47.0% 56.6%

78.5%

77.5%

76.7%

60.3% 53.0% 49.4%

77.3% 65.9% 64.0%60.1%

60.8%

60.0%

53.4%

51.7%

40.0%

20.0%

0.0%
Healthcare Government
Life Sciences Education Banking Discrete Manufacturing Resources

Communication & Media

Insurance

Process Manufacturing

Transportation

Yes, Implemented

Securities & Investments

No BA Strategy

Source: IDC Vertical Research Group IT Survey, 2011, N = 4236


IDC Visit us at IDC.com and follow us on Twitter: @IDC and @IDCInsights

Oil & Gas

Utilities

Retail

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May-12

Software Budget Allocation for Business Analytics by Industry and Company Size
Q: Considering just the software portion of your U.S. organizations 2011 external IT spending, what percent is allocated to business analytics software?
% of Budget Allocated to BA 6.0 5.0 5.0 4.3
4.0

% of Budget Allocated to BA 7.0


6.0

6.0
5.0

5.5

4.4

4.5

5.2 5.1 5.0 5.0 4.8

4.5 4.4 4.3 4.2 4.2 4.1 4.0 2.9

4.0
3.1

3.0 2.0
1.0

3.0

2.0

0.0
Prof essional Services Communications & Media
Transportation Process Manuf acturing Lif e Sciences
1.0

0.0

1-99 Emp

100-499

500-999

1000-4999

5000+

Source: IDC Vertical Research Group IT Survey, 2011, N = 2311


IDC Visit us at IDC.com and follow us on Twitter: @IDC and @IDCInsights

Securities & Investments

Discrete Manuf acturing

Government

Health Care

Education

Oil & Gas

Insurance

Banking

Utilities

Retail

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May-12

Have Business Analytics Investments Paid Off?


Q: In general, would you say that your investment in a Business Analytics/Intelligence solution has paid off? % Unsure How to Measure Benefits
50.0%
41.7% 40.0%

41.0%
31.6%

Yes 35.8%

38.4%
No % Not Sure How to Measure Benefits

30.0%

30.0% 20.0%

29.3%

10.0%

14.7%
% Not Sure How to Measure Benefits 60.0% 47.3% 42.6% 40.0% 41.7% 39.0% 37.9%
35.8%

0.0%
1 - 99 Emp 100-499 500-999 1000-4999 5000+

35.1%

34.9%

34.6%

34.0%

20.0%

0.0%
Process Manuf acturing
Communication & Media Government

Transportation

Oil & Gas

Source: IDC Vertical Research Group IT Survey, 2011, N = 2124 and 767
IDC Visit us at IDC.com and follow us on Twitter: @IDC and @IDCInsights

Securities & Investments

Discrete Manuf acturing

Lif e Sciences

Utilities

Retail

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May-12

Essential Guidance Capitalizing on Vertical Opportunities


For Vendors: Know your customers industry-specific issues
Over 65% of respondents believe that it is very important for a vendor to have a thorough understanding of their industry Customers are willing to pay a premium for a vendor with industry-specific expertise

Know what customers expect from you


Sales personnel that understand industry pain points and address specific problems Business units and products focused around industry Customer references in specific industries

Help customers understand how to measure ROI and benchmark themselves against their peers
Not being able to measure results and quantify benefits of a solution may lead to a lack of future funding

Look for IT services growth in emerging IT megatrends


Price and existing relationships are the two main factors in choosing an IT Services vendor Amid growing price competition and maturing growth, services vendors should use their vertical expertise to work with existing clients in areas like cloud, analytics and smart technologies

For End-User Companies: Know the budgetary benchmarks for your industry
The ability to benchmark your budgetary and operational efficiencies against your peers in the industry is a critical step in justifying your budgets 35
IDC Visit us at IDC.com and follow us on Twitter: @IDC and @IDCInsights May-12

Appendix

Copyright IDC. Reproduction is forbidden unless authorized. All rights reserved.

For More Information


For more in-depth research on the topics presented in this presentation, including detailed industry and company size forecasts across 60+ technologies, please refer to the following programs:
United States IT Budget Benchmarking

United States IT Services and Vendor Vertical Views United States Software Market Forecaster: Vertical Markets
Business Analytics Solutions with Vertical Views Worldwide Banking Solutions Market Share Guide U.S. Healthcare Solutions Market Share Guide
Visit www.idc.com, click on the Products + Services tab and the Subscription Services link.

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Terms of Use Policy

Except as otherwise noted, the information enclosed is the intellectual property of IDC, copyright 2011. All rights reserved. Reproduction in any form is forbidden unless authorized; contact permissions@idc.com.

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